Court Opinion

ID: 9706141
Source: CourtListenerOpinion
Date Created: 2023-08-26 01:32:33.464794+00
Date Added: 2024-06-11T18:22:19.631507
License: Public Domain

BATTAGLIA, J.,
Dissenting.
I respectfully dissent.
Katherine Ryon was beaten to death during the course of a robbery that occurred in her home. After James Calvert McGee was convicted of felony-murder for his participation in the robbery and murder of Ms. Ryon, a money judgment was entered against him pursuant to a settlement agreement, in which McGee compromised civil claims brought against him by Robert Duvall, the Personal Representative of the Estate of Ms. Ryon. The majority today concludes that Ms. Ryon’s estate cannot enforce its judgment against McGee’s interest in an $877,000.00 spendthrift trust established for him by his deceased mother. The majority acknowledges that claimants seeking alimony, child support, and unpaid taxes may attach a beneficiary’s interest in a spendthrift trust, but concludes that the victim of a violent tort may not, reasoning that such a victim is only “a mere judgment creditor.” For the reasons expressed herein, I respectfully disagree.
A spendthrift trust is a trust that restrains the voluntary or involuntary transfer of a beneficiary’s interest in the trust. See Restatement (Second) of Trusts § 152(2)(1959). As the majority points out, this Court first acknowledged the validity of spendthrift trusts in Smith v. Towers, 69 Md. 77, 14 A. 497 (1888). In that case, our predecessors recognized that although “the right to sell and dispose of property ... is a *502necessary incident ... to the absolute ownership of ... property,” the “law does not ... forbid all and any restraints on the right to dispose of [trust property].” Id. at 87-88, 14 A. at 498-99. The law forbids, “only such restraints as may be deemed against the best interests of the community.” Id. at 88, 14 A. at 499. “The donor or devisor” of trust, the Smith court stated, is “the absolute owner of the property” and “has the right to prescribe the terms on which his bounty shall be enjoyed, unless such terms be repugnant to the law.” Id. at 88-89, 14 A. at 499. The Smith court reasoned that the gift of an equitable right to the exclusion of creditors is not “repugnant to the law” because “[a]ll deeds and wills and other instruments by which such trusts are created, are required by law to be recorded in the public offices, and creditors have notice.of the terms and conditions on which the beneficiary is entitled to the income of the property.” Id. Thus, if creditors choose to extend credit to such debtors, “they do so with their eyes open.” Id.
Ms. Ryon, of course, did not have the luxury of assessing the extent and character of McGee’s financial resources before he robbed her and she died. For this reason, most legal scholars agree that tort creditors should not be precluded from recovering against a tortfeasor’s interest in a spendthrift trust. According to Scott on Trusts,
A man who is about to be knocked down by an automobile has no opportunity to investigate the credit of the driver of the automobile and has no opportunity to avoid being injured no matter what the resources of the driver may be.... [T]here seems to be something rather shocking in the notion that a man should be allowed to continue in the enjoyment of property without satisfying the claims of persons whom he has injured. It may well be held that it is against public policy to permit the beneficiary of a spendthrift trust to enjoy an income under the trust without discharging his tort liabilities to others.1
*503Similarly, and significantly, in Bogert on Trusts and Trustees, it is emphasized that, “the validity of spendthrift trusts ... does not apply” and that the beneficiary should not, therefore, “be permitted to circumvent the case and statute law as to liability for wrongs by taking advantage of the spendthrift clause.” 2
The majority concedes that tort creditors do not have the benefit of notice, which, as was discussed in Smith, supra, is a primary purpose for not allowing the invasion of spendthrift trusts. Despite this, the majority concludes that Ms. Ryon’s estate cannot reach the corpus of the spendthrift trust because its claim is nothing other “than a debt” and that “its exemption from the bar of a spendthrift trust” is not “a matter of public policy.” The majority, in my opinion, is wrong.
This Court has held that a beneficiary’s interest in a spendthrift trust may be attached to satisfy claims for alimony arrearages and for child support. See, e.g., Safe Deposit & Trust Co. v. Robertson, 192 Md. 653, 663, 65 A.2d 292, 296 (1949); Zouck v. Zouck, 204 Md. 285, 300, 104 A.2d 573, 580 (1954). Also, a spendthrift trust was attached for the payment of federal income taxes in Mercantile Trust Co. v. Hofferbert, 58 F.Supp. 701, 705-06 (D.Md.1944). “[Njone of these cases,” the majority states, “was premised on there having been a lack of notice.... Rather, the courts recognized a fundamental difference between these obligations and those of ordinary contract creditors.” The fundamental difference is essentially that these obligations were premised upon judicial intervention and determination of sound public policy.
Just as it is sound public policy to permit the attachment of a spendthrift trust for alimony, child support, and taxes, it is also as sound to permit invasion to make victims of tortious conduct whole. Indeed, a tortfeasor may be liable not only for compensatory damages, but also punitive damages, which we allow in order to “punish the wrongdoer and to deter such conduct by the wrongdoer and others in the future.” Caldor, *504Inc. v. Bowden, 330 Md. 632, 661, 625 A.2d 959, 972 (1993). Consequently, to equate victims of tortious conduct with contract creditors and distinguish them from recipients of alimony, child support, and tax claims, is without merit.
As the majority concedes, spendthrift trusts are considered valid in Maryland in large part because, by virtue of filing requirements, creditors are put on at least constructive notice of the limited interest of the beneficiary of such a trust. Such notice allows creditors to protect themselves, something that Ms. Ryon could not have done. Moreover, the “duty-debt” distinction set forth by the majority as the basis for its holding is unavailing. The obligation to restitute a wrong is commensurate with the obligations to pay alimony, child support, and taxes. I agree with the commentators that “it is against public policy to permit the beneficiary of a spendthrift trust to enjoy an income under the trust without discharging his tort liabilities to others.” See Scott on Trusts, supra. Consequently, I respectfully dissent.

. Fourth Edition, § 157.5, p. 220.

. Second Edition, Rev’d, § 224, p. 479.