Court Opinion

ID: 5548811
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:23:53.457558+00
Date Added: 2024-06-11T08:35:00.210496
License: Public Domain

The Chancellor.
If it was proper for the master to direct any exception to be inserted in the assignment to the receiver, under this order of reference, it should have been in the language of the exception contained in the thirty-eighth section of the article of the revised statutes relative to the court of chancery. (2 R. S. 174.) No exception of this kind; however, is necessary or proper to be inserted .in the assignment; as this court, in the case of Hallett v. Thompson, (5 Paige's Rep. 583.) has decided that this section of the statute was only intended to exempt the beneficial interest, of the cestui que trust, in those cases where' the cestui que trust hiniself could not voluntarily alien his interest in the trust property.' And in those cases a general assignment to the receiver will not convey to him an interest in a trust for the receipt of the rents and profits of lands, or of the interest or income of personal estate for the. use of a cestui que trust, .which by law is inalienable by the assignor.
But where the defendant himself has a right to sell his interest in the trust fund, in anticipation, and to use the proceeds of such sale as he pleases, equity requires that he should appropriate it to the payment of his honest debts; and he must assign such interest to the receiver in a creditor’s suit. The owner of real or personal estate may create an interest in the rents and profits, or the income thereof, finder the provisions of the revised statutes, in trust for the use or benefit of a third person, whom from improvidence or otherwise, the donor does not think proper to entrust with the- absolfite disposition and control of his beneficial interest, in the trust property, by anticipation. But neither law nor sound policy will allow an absolute and unconditional right to propeityto be vested in a person, which he may use and dispose of as he pleases, by anticipation or otherwise, but in relation to which property he may set his creditors at defiance, by means of a mere nominal trust. Even in those cases where the legislature has thought proper to allow an inalienable interest in the *141rents and income of property to be created, by means of a valid trust, a reasonable limitation has been fixed to the power to protect that interest against the honest claims of creditors, by subjecting the surplus income, beyond what may be necessary for the education and' support of the cestui que trust, to their equitable claims to payment. (1 R. S. 729, § 57. Idem, 773, § 2.)
In the case under consideration, I can see no ground whatever for considering this bequest as a trust; any more than in the case of an ordinary pecuniary legacy payable immediately, and charged upon the real estate, as well as upon the personal estate, of the testator generally. The real and personal estate is not devised or bequeathed to trustees, but to the testator’s two sons absolutely, in fee, subject however to the charge of the legacy; nor is the legacy charged upon the rents or income of the property merely, but upon the whole estate generally. If the testator had left personal estate sufficient, that would have been the primary-fund for the payment of the annuity; and the widow might have brought an action at law against the personal representatives of the testator, in her own name, for the recovery thereof, upon complying with the requisitions of the statute as to security, if the annuity was not paid from time to time, as it became due; or she might have compelled payment thereof by a proceeding before the surrogate. But as the testator left no personal estate beyond the amount of his debts, the annuity was a charge upon his land, in the hands of the devisees, or their grantees, which this court would enforce, by a sale of the real estate upon which the annuity was a lien, if the quarterly payments were not made, by the owners of the estate, from time to time as they became due. In no sense, then, can this annuity be said to be property, money, or a thing in action held in trust for the defendant, within the intent and meaning of the exception in the thirty-eighth section of the title of the revised statutes before referred to. The master, therefore, should not have directed this exception to be inserted in the assignment of the defendant’s property to the receiver, but should have approved a general assignment without such an exception.
*142The acceptance of this assignment, under the decision of the Piaster, with full notice from the counsel for the complainants that they excepted to such decision, was no waiver of their right to bring the question before the court for review. An order must therefore be entered, directing the defendant to execute a liew assignment to the receiver, for the purposes of this suit, of all her right and interest in the annuity or yearly sum of $70.0 to which she now is entitled, or may hereafter be entitled, under the will of her deceased husband, as mentioned in the complainant’s bill; such new assignment to be executed under the direction of the master, and to be approved of by him as to its form and manner of execution. The taxable costs of the complainants upon this application are to abide the event of this suit, and to be paid by the receiver out of the assigned property, if the complainants succeed in obtaining a decree against the defendant.