90 Ky. 452 | Ky. Ct. App. | 1890
delivered the opinion op the court.
These consolidated actions were heard together, and a judgment rendered for the bank. The defense relied on by the appellant is, that the bank (appellee) agreed that new notes should be executed for the old notes then owing, and that William Cromey’s name as an individual indorser' should be substituted in lieu of his name as executor and trustee of Bull’s estate, thereby releasing the estate of Bull from any and all responsibility upon the paper. This new paper was •executed in January of the year 1886, and was given, as defendants allege, for the purpose of releasing the liability of the trust property, and making Cromey individually liable, when, in fact, the defendants say the bank, in violation of its agreement, entered into an arrangement with the trustee, unknown to them, by which his liability as such was still continued, regardless of the arrangement under which the new notes were executed — the same now in controversy. They, therefore, deny the right of recovery.
The agreement or consideration for the renewal of
The important question, and the only one necessary to be considered, arises from the will of John Bull, in that part of the devise to each of his sons, by which it is provided that the rents and profits of the estate-devised shall not be subject to the claims of any creditor. Under our statute, construed by repeated decisions of this court, it has been held that where there is a beneficial interest in property, that interest may be-subjected to the payment of the debts of the beneficiary.-
In the case before us the testator devised certain specified property to his two sons, to be held in trust. by his executor, and to be controlled by him during the life-time of Edward and Robert (the sons), the-executor to pay in quarterly payments the net proceeds of the rents and profits to the beneficiary. Following this devise to Edward and a like devise to Robert is this provision: “The said property shall not be, in any manner, encumbered by, nor shall, it or its rents or profits be in any- way anticipated by, or in any way subjected to, the debts of my son Ed- -
The feature distinguishing this case from that of Bland v. Bland is, that in the case of Bland the devisee was never; divested of his interest or deprived -of his title, but was, in fact, given such an absolute estate as to exclude the idea that he was not in every sense a beneficiary. Here the use, and we might say the life estate, ceases in Edward and becomes vested in his wife; so there is no estate in Edward for either himself or his creditor, and as the' devisor (his father) had the power to make such a limitation or create the defeasance when disposing of his own estate, neither Edward nor his creditor can complain. Equitable life estates, or a beneficial interest in the debtor, can not escape subjection to the payment of his debts. But here he had no estate, because the devisee becomes divested by the very terms of the will that neither misleads nor deceives the creditor, who is trusting the beneficiary in the business transaction.
. It is said, however, the corpus of the estate is in Edward, and the rents or profits vested in his wife. The estate is in the trustee, with the right of Ed
The testator might as readily have devised the estate in the first place to the wives of his two sons, or any they might- thereafter have, in order to preserve it for their- families, and the argument would then be used that this was done merely to enable the wives to hold the property that his sons might enjoy it, and still the devise would be upheld. Counsel seem to have overlooked the fact that this was the testator’s own property he was disposing of, and not his sons, and argue as if the testator had no power to annex a condition to the devise that might terminate at once all interest the sons had in the property. It is said that there is no authority or precedent to be followed in this case, but after a careful examination of a number of cases we find the right of a testator to make such a disposition of his estate fully sustained, and have failed, by reference to the authorities referred to by counsel for the appellees, to find any single case in which their view of this question is maintained. Some of the authorities go to the extent of holding that the interest and dividends of real or personal property held in trust may be enjoyed by the beneficiary without liability for his debts. (Nicholas v. Eaton, 91 U. S., 716)
This court has held the contrary doctrine, but has-never gone so far as to adjudge that the beneficiary
In Lewes v. Lewes, 6 Sim., 304, the testator devised certain lands to trustees, to receive rents and to pay a certain sum for the benefit of his son’s family, and the residue for the use of his son, with no power on the part of his son to charge or alienate it, and that it should not be subject to the claims of creditors. The will also provided that if the son violated the provisions of the trust, the residue should not be paid to him, but should be accumulated. The trustee- conveyed the property for creditors, and it was held that his interest in the residue ceased.
In Brandon v. Robinson, 18 Ves., 429, Lord Eldon said: “There is no doubt that property may be given to a man until he shall become bankrupt. It is equally clear, generally speaking, that if property is given to a man for his life, the donor can not take away the incidents of a life estate. If a condition is so expressed as to amount to a limitation, reducing the interest short of a life estate, neither the man nor his assignees can have it beyond the period limited.” This statement of the Lord Chancellor embraces the whole law in this class of cases.
In the case of Oldham v. Oldham, reported in L. E., 3 Eq., 404, before the Master of the Eolls, the question was, whether Oldham had been divested
The case of Shee v. Hale, 13 Ves., 404, in chancery, John Mootham, by his will, bequeathed to his son, through trustees, an annuity of two hundred pounds during his life, with the condition that it was to fall into the residuum of the estate in the event his son should sell, assign or part with the same as a security for money to be advanced, or should anticipate the same by pledging, &c., except only as to the then next annual quarterly payment. The son took the benefit of the insolvent act, and, his assignees claiming the annuity, it was held that the assignees could not take the fund, but that it passed as directed by the will.
The doctrine of the English courts is well settled on the point involved, and the courts of this country have followed it. In Nichols v. Eaton, reported in 91 U. S., 716, the Supreme Court was not disposed to accept the doctrine in so far as it restricted the power of testamentary disposition so as to prevent the beneficiary from using and enjoying the benefits of the devise against the claims of creditors. In that case the bankruptcy of the devisee was, by the will, to terminate all his interest in the estate,
. Joshua' Perris died in 1848, leaving this codicil to his will: “I hereby declare, in making provision in my will, that the income of one-third of my estate, after payment of debts and legacies, should be paid to my son, Myron H. Perris. It was my design to make provision for the support of himself and family, which could not be taken from them by Ms creditors, .and for the purpose of making myself more plainly understood on this point, and to carry out said design, it is my will that in case creditor’s bill shall be filed, or any proceedings instituted against my son Myron for the purpose of reducing the interest or income so provided for him, and diverting it from the object intended by me, and a decree or judgment obtained for that purpose, that then from that period the said interest or income shall cease, and I direct my executor from thenceforth to expend the said interest or income for the support of the family of the • said Myron H. Perris, either by paying the same to
The controversy was, in that case, between the creditors of 'the son and the devisees over or the executors. The New York Court of Appeals was then presided over by Denio as Chief Justice, with three associates, .and the Supreme Court Judges, four in number, ex officio members of the Court of Appeals at the time that case was decided. Separate opinions were delivered from each court, holding, without dissent, the provision of the will of Perris, that the interest of the devisee should cease on the recovery of a judgment by creditors, was valid.
In the case of White v. Thomas’ Trustee, 8 Bush, 661, the will provided that the right of another to own the property devised should not be subject to alienation or sale, and that the right to the use should terminate upon an attempt to do so by the beneficiary or her creditors. This provision was upheld on the ground that Mrs. White had • no interest in the property.
• These cases, it -.seems to us, should be conclusive of the question raised, and in nowise subverts the rule of law that .one vested with an interest in property can not use or enjoy it to the exclusion of creditors. Nor can the devisor, who has attempted to ¡secure an estate for the benefit of those who are to take under him, be charged with fraud in endeavoring to anticipate the wants of his sons or their families, or liable to the charge of continuing, in violation ■of law, to place the estate devised beyond the reach of his son’s creditors. It was his estate. He had the
Judgment below is reversed that such a judgment may be entered. In all other respects it is affirmed..