Court Opinion

ID: 3591448
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:01.816095+00
Date Added: 2024-06-11T13:56:27.042068
License: Public Domain

I am unable to agree in the decision about to be made, for the reason that it seems to me clear that the legislature has established the law applicable to this case adversely to the holding of the court.
It appears that the defendant Barnes in October, 1883, while he was out of debt, conveyed real estate to a trustee in trust, "reserving to himself the beneficial interest in the said property for life, subject to the necessary expenses of the said trustee, with remainder over, and with full power of sale in said trustee;" that the said trustee accepted his trust and at the time of the commencement of this action was in possession of the property. Since that time Barnes seems to have become indebted to the plaintiff, who now seeks by this action to collect her claim out of the property so conveyed in trust.
It is the law in England that the interest or income of the equitable life tenant (with the single exception of a trust for a married woman) is alienable by the beneficiary, passes to an assignee in bankruptcy and is at all times subject to the claims of creditors. Such was formerly the law in this state, and in many of our sister states. The legislature in its wisdom saw fit to disregard the views of the judges and to reverse the law as settled by the courts. No good purpose can be accomplished by a discussion of the question whether the courts, or the legislature were in the right. The legislature had the power to change the law on that subject absolutely, and did it. The statute reads: "No person beneficially interested in a trust for the receipt of the rents and profits of lands, can assign or in any mannerdispose of such interest; but the *Page 326 
rights and interest of every person for whose benefit a trust for the payment of a sum in gross is created, are assignable." (1 R.S. 730, § 63.) What the beneficiary cannot grant by way of anticipation, the court cannot, except to the extent declared in another provision of the statute, which reads "the surplus of such rents and profits beyond the sum necessary for the education and support of the beneficiary, shall be liable for the claims of his creditors." (Revised from 1 R.S. 729, § 57; see III Birdseye's R.S., p. 2613, § 78, second ed.)
It is not alleged in this complaint that there is any surplus of income over and above that needed for the support of Barnes, and, therefore, this provision is not applicable to the case in hand.
A person, therefore, who is "beneficially interested in a trust for the receipt of the rents and profits of lands," cannot dispose of the income by way of anticipation, nor can his creditors claim it, except as to the surplus as prescribed by the provisions of the statutes quoted. (Douglas v. Cruger,80 N.Y. 15; Lent v. Howard, 89 N.Y. 169.)
That would seem to leave only the question whether there was a valid trust created in the lands in controversy.
It is not pretended that it is invalid against the plaintiff upon the ground that it was made to hinder, delay and defraud creditors. The deed is in due form and was properly executed; its trust provisions are in harmony with the statutes bearing upon that subject, and there is no claim that it was not valid at the time of the creation of the trust. That being so, the trust is governed by the Revised Statutes, the whole estate in law and equity became vested in the trustee, and the appellant has no estate or interest whatever in the lands. (1 R.S. 729, § 60.)
It has been said in this case, with reference to the assertion that a creditor cannot reach the beneficial income in the trust estate, that "the proposition itself would seem to shock our sense of justice." That was the position which the courts formerly took as to the beneficial income of all trusts in lands. Recognizing that the statute has some force and cannot be *Page 327 
altogether ignored, the decision is to the effect that where trusts are created by third parties, only the surplus of income can be obtained by the creditor, but that a different rule applies where the income goes to the founder of the trust.
There is no such distinction pointed out in the statute; it does not speak of a person beneficially interested in a trust created by third parties or by the founder of a trust. It refers to persons beneficially interested in a trust "for the receipt of the rents and profits of lands." This language is broad enough to include all trusts in land created in conformity with the statutes, and the rules of statutory construction require that the language employed should be so construed; the greater includes the less, and I see no escape from holding that it covers every valid trust in lands created under the Revised Statutes, and this must be conceded to be such a trust. If the public interests require that a distinction shall be made as to the disposition of the income to creditors where the trust is created by a third party and where the founder of the trust is the person beneficially interested in the income, then the legislature can and probably will make the change. But it is not the province of the court to make it.
I advise a reversal of the judgment.
HAIGHT, MARTIN and VANN, JJ., concur with BARTLETT, J., for affirmance; GRAY, J., also reads for affirmance; O'BRIEN, J., concurs with PARKER, Ch. J., for reversal.
Order and judgment affirmed.