Court Opinion

ID: 8902871
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:22:22.978249+00
Date Added: 2024-06-11T17:07:58.897728
License: Public Domain

WIDENER, Circuit Judge,
concurring:
I agree with the result reached by Judge Craven, and, in large measure, with his opinion. I state my views separately only to emphasize that I regard the law of West Virginia as controlling this case, and to remove from the opinion any possible implication that State law does not govern the issue before us.
I also wish to make it clear that we announce no principle that a creditor can recover a debt from- assets of a decedent debtor that may have previously passed directly to a third party through a remainder interest. Our holding is simply that, in accord with established law, it violates public policy for an individual to “have an estate to live on, but not an estate to pay his debts with.” Petty v. Moores Brook Sanitarium, 110 Va. 815, 67 S.E. 355 (1910).1
I believe the district court applied the wrong State law and that the West Virginia Supreme Court, if called upon to decide this case, would find the Petty case to be the persuasive precedent, and would reach the same result we reach here. See Commissioner v. Estate of Bosch, 387 U.S. 456, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967).
Petty stands for the proposition that a settlor of a trust cannot create the trust for his own benefit, while shielding the trust assets from his creditors. This principle, called “well established” by the West Virginia court, is cited with approval in Guernsey v. Lazear, 51 W.Va. 328, 41 S.E. 405, 409 (1902). See Annot. 34 A.L.R.2d 1335, 1342.
On this basis, I agree with Judge CRAVEN that the judgment of the district court must be reversed.
Judge WILLIAMS has authorized me to state that he concurs in this opinion.

. While West Virginia has recognized spendthrift trusts by statute, for example, such a trust cannot be validly created when the settlor and the beneficiary are one and the same person. See W.Va.Code § 36-1-18.