Court Opinion

ID: 5548200
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:22:59.713245+00
Date Added: 2024-06-11T08:34:58.928540
License: Public Domain

The Chancellor.
The legacy in this case Is perfectly under the control of Thompson, the legatee, so that he may obtain payment thereof whenever he pleases. This power to ■compel payment of the legacy is a beneficial power in the legatee, which would pass to the assignees under the English bankruptcy or insolvency acts. It would also pass to the assignee of Thompson under an assignment by virtue of the title of the revised statutes relative to the assignment of the estates of non-resident, absconding, insolvent or imprisoned debtors. (1 R. S. 735, § 104.) In Graves V. Dolphin, (1 Sim. Rep. 66,) Sir John Leach held that an annuity given by a father to his son, passed under an assignment of the commissioners in bankruptcy, although the estate upon which 4he annuity was charged was in the hands of trustees ; and the testator had expressly declared, in his will, that the annuity was given for the personal maintenance and support of his son, during the whole term of his natural life, not liable for his ■debts, nor subject to any charges or encumbrances of his; that It should bs paid into his hands only; and that his receipt alone should be a good and sufficient discharge for the same. His honor said the testator might have made the annuity determinable upon the bankruptcy of his son, but that the policy of the law did not permit property to be so limited that it should continue in the enjoyment of the bankrupt, notwithstanding his bankruptcy. A similar decision was made by Lord Eldon in Brandon v. Robinson, (18 Ves. Rep. 428.) The master of the rolls decided the same point, in favor of an assignee under the insolvent debtor’s act, in the case of Green v. Spicer, (1 Russ, & Mylne’s Rep. 395,) although the trustee, in that case, had a discretion as to the time and manner of applying the rents and profits of the trust property to the support and maintenance of the cestui que trust; the whole beneficial interest in the rents and profits being vested in such cestui que trust. (See also Pierey v. Roberts, 1 Mylne & Keen’s Rep. 4.)
*586Independent of any statutory provisions, therefore, 1 have no doubt that it would be competent for this court, and would also be the imperative duty of the court, to compel the defendant Thompson to execute this beneficial trust power, so as to enable the complainant to obtain payment of the legacy; to be applied in satisfaction of his judgment, as far as it would go.
As a general- rule, it is contrary to sound public policy to permit a person to have the absolute and uncontrolled ownership of property for his own purposes, and to be able at the same time to keep it from his honest creditors. The revised statutes have made one exception to this rule, to the extent of a provision for education and necessary maintenance merely. But in that case the beneficial owner is himself deprived of the power of aliening or encumbering the property, or his interest in the rents and profits, as cestui que trust; and the surplus income, beyond what is necessary for his support and maintenance, is in equity subjected to the claims of his creditors. (1 R. S. 729, § 57; 730, § 63.) The provisions of the revised statutes on this subject, contained in the 57th and 63d sections of the article relative to uses and trusts, in the connection in which they are there found, are applicable to trusts to receive rents and profits of real estate, and to apply them to the use of the cestui que trust for life, or a shorter period. But courts of justice have always endeavored to preserve the analogy between estates or interests in land, or the income thereof, and similar interests in personal property. By analogy therefore to these rules as to the interest of a cestui que trust in the rents and profits of real estate, and the right of a judgment creditor, to reach the surplus rents and profits of land beyond what is necessary for the support and maintenance of the debtor and his family, I feel myself bound to hold that a creditor’s bill will reach a similar interest of the debtor in the surplus income of personal property, held by another for his use and benefit; but it cannot reach that part of the income of personal property, held upon such a trust, which may be necessary for the support of the judgment debtor.
The exception contained in the last clause of the 38th section, of the title of the revised statutes relative to the court of *587chancery, (2 R. S. 174,) was unquestionably intended by the legislature to protect the beneficial interest of the cestui que trust, in trusts of this description, and in such only, to the extent of a fair support and maintenance out of the trust property which had been thus invested in trust by some other person, for his benefit. But the case which is now under consideration does not come within this class of trusts. It is very obvious, from the terms in which the bequest was made, that the object of the testatrix was not to secure to the legatee a support and maintenance out of the interest, or income, of a trust fund, which should be inalienable by the cestui que trust, in analogy to the provision before referred to in relation to a similar trust to receive the rents of real estate for the same object On the contrary, it was an attempt to give to the legatee an absolute and uncontrollable interest in personal estate, and at the same time to prevent its being subject to the usual incidents of such an absolute right to property, so far as the rights of creditors are concerned. This cannot be done, consistently with public policy, or the settled rules of law. If such a principle was once sanctioned by this court, it would only be necessary for a testator to direct his executors to turn bis real estate into money and hold the same subject to the control of the legatee, io defeat entirely the benefit which was intended to be secured to creditors, by the 57th section of the statute before referred to, out of the surplus income of the estate.
The complainant is entitled to have the $4000 in the hands of the executors applied in satisfaction of his judgment; and the demurrer must be overruled, with costs.