Although the terms of the will are not set forth in the complaint with any degree of detail, there is enough stated to justify the conclusion that the fund from which the annuity to William H. Bonnett is payable, was given to the executors m trust for that purpose, to invest the same and to make such payments to the annuitant from the income thereof during his life. The executors are the trustees of this fund, and William H. Bonnett is the cestuñ que trust, and it is a «trust of personal property. The theory of the complaint unquestionably is, that the interest of the cestui que trust in this fund is alienable/ that it is a vested interest in possession, and that an assignment to the receiver passes the debtor’s interest in the fund, even though there was no interest or income in the hands of the executors at the time of the appointment of the receiver, and none then due and payable. Hence the allegations in the complaint are, not that the executors had any income in their hands at the time of the appointment of the receiver, or that any had then become due, but that they have collected interest on the fond accruing since such appointment, and have refused to pay it over to the receiver; and that the latter is entitled to all the interest which has accrued since the date of his appointment. This presents the first question which is raised by the defendants in the case, to wit, that nothing passed to the receiver as property of the judgment debtor except the installments of interest which had already become due at the period of his appointment; that future installments which might or might not ever become due, had not that characteristic of fixed and ' determinate interest which entitled them to the denomination of property, such as would pass to the receiver under an order made in supplementary proceedings. There are some cases which tend to such a conclusion, and such seems to have been the opinion of the court below; but I think that court failed for the moment to recall a distinction which is made between different classes of cases on this subject, and which is founded upon the alienability or non-alienability of the debtor’s interest in the fond. If this interest is not alienable so far as it *12 is necessary for the support of the cestui que trust, 'then I think it has been well held, in several of the cases, that it will not pass to a receiver until it has actually become due, and perhaps not until it has been in some way determined that there will be a surplus over and above the inalienable right of the judgment debtor to a support; for it is only such surplus which is liable to the claims of creditors; and this surplus, it has been held, is not properly ascertainable under supplementary proceedings- to discover and appropriate the debtor’s prоperty to the satisfaction of the judgment, but only in a suit or proceeding where the issue is directly made upon the amount necessary for the debtor’s support, and to which the trustees and cestui que trust are parties. But if the debtor’s interest in this fund is vested and certain, though the time of payment may not have arrived, it strikes me it has about it those elements of property which would enable it to pass to a voluntary assignee or to an assignee under the insolvent laws, or to a receiver in supplementary proceedings. It is an interest to which the debtor is absolutely entitled under the will, of which nothing but the law can deprive him, which is necessarily to continue during his life, and which would have an appreciable value, dependent upon his probabilities of continuance in life, if exposed for sale. It is a fixed life interest in a specific fund, and the circumstance that the income or interest has not bеcome due, does not seem to me to destroy the positiveness and absoluteness of the interest, even if it should be held to detract slightly from its value in the market. We are therefore necessarily driven to examine the other and more material question on the case, to wit, the alienability of this interest by the judgment debtor. If it is so far within his power that he can effectually transfer it to another person, then it is also, I think, accessible to the claims of his creditors.
The determination of this question must depend upon the construction which should be given to our statutes, in regard to limitations of, and interests in, personal property, and in regard to the exemption of certain trusts from the claims of creditors.
*13
It is undeniable that if this were an interest in a trust, for the receipt of the rents and profits of lands, it would not be assignable; and it -has been held in several cases, that the statute which provides thаt limitations of future or contingent interests in personal property, shall be subject to the statutory rules prescribed in relation to future estates in land, was, in effect, a legislative application of the same principles and policy to both classes of property; and that, even if the provisions of the statute were not sufficiently comprehensive, absolutely to require as a peremptory injunction of statute law, their application in all their length and breadth, and in the same degree, to both classes of property, the argument to be derived from the general similarity of the legislative enactments, in regard to both classes of property, from the similar, if not equal mischiefs to be remedied, and from the general policy of the law, would authorize a court of equity, in the exercise of its acknowledged powers, to apply the same rule оf construction to both. I am aware that Mr. Justice Cowen, in
Kane
v.
Gott
(
*14 If the view of the case thus far taken be correct, it becomes unnecessary to consider the further question which would otherwise arise, to wit, whether the clause in that section of our Revised Statutes, concerning the power to decree satisfaction of a debt out of property belonging to a debtor, or due to him, or held in trust for him, which excepts from the operation of such a power, the case “ where such trust has been created by, or the fund so held in trust has proceeded from some person other than the defendant himself,” interposes an insuperable barrier to the relief sought by the plaintiff, if he were otherwise entitled to it. One theory is, that this provision was designed tо protect the interest of a beneficiary in a trust, whose object it was to provide for his maintenance and support, and to the extent necessary for such purpose only. Another theory is, that the exception exempts from the jurisdiction'of a court of equity in this respect, all trusts, of whatever description, which proceed from, or are created by some person other than the debtor himself. A third theory is, that the exception applies to property held in trust for the debtor, not belonging to or coming from him, but proceeding from a third person, though created for the debtor’s benefit, and in all such cases preserves the trust fund intact. My own opinion is, that the true reading of the statute is this: That as a general proposition, property held in trust for the debtor, and for his benefit, may be reached through the agency of a court of equity, and applied to thе satisfaction of his debts, but not property held in trust for him upon a trust, or arising out of a fund proceeding from a third person ; which last named trust property is to be exempted from equity jurisdiction, not wholly or absolutely, but to the same extent, and under the same conditions under which trust property may be enjoyed by the debtor, secure from the attack of his creditors, under other and general provisions applicable to trust property. In other words, it was a legislative declaration, in language intended to be explicit,'but possibly liable to some misconstruction, that property held in trust for the debtor, when such trust proceeded from himself, *15 was in no case to be protected for Ms benefit; but where the trust or the fund proceeded from some other source, the liability of the property to, or its exemption from judicial seizure, was to depend upon the general provisions of lаw applicable to trust property.
It was not the intention of the legislature to exempt every species of trust property originated by a tMrd person from liability for the debts of the beneficiary, nor to declare in this connection the condition and circumstances upon which such liability was to depend, but to qualify the comprehensive language employed in a previous part of the section and partially limit its otherwise apparently umversal application.
The decision of tMs question is not, however, necessary to this case, in the view which I have taken of it; for if the interest of the debtor in tMs property is only subject to .the claims of his creditors in a particular contingency, and then only to a limited extent, to wit, on the report of a surplus over and above an amount necessary or proper for Ms maintenance and support, we cаnnot infer that such surplus existed, and it was the office and duty of the pleader, by proper averments, to present such fact in the complaint, even if it were possible in the present proceeding to do so without new and distinct issues, or additional parties. The omission to state any of these facts" in the complaint, I regard as a substantive defect, properly availed of by demurrer.
I am, therefore, of opinion that the judgment of the court below was right, and should be affirmed.
Selden, Davies, Ingraham and Mullen, JJ., also for affirmance.
This was an appeal by the plaintiff from a judgment of the Superior Court of New York, in favor of the defendants, rendered upon a demurrer to the complaint.
The complaint stated that the plaintiff had, pursuant to' certain proceedings supplementary to execution, in two certain actions wMch were mentioned, and in each of wMсh *16 William H. Bonnett was one of the parties defendant, been appointed receiver of all the debts, property, equitable interest, rights and things in action of the defendants in each of those actions; the date of the first appointment being October 9th, 1838, and of the other June 3d, 1863; and that the plaintiff was duly invested with all rights and powers as such receiver, and that the defendants had notice of these appointments. The next averment was' as follows: “ The plaintiff further shows that Peter Bonnett (the brother of William H. Bonnett), late of the city of ¡New York, deceased, in and by his last will, dated ¡November 20th, 1860, gave and bequeathed the interest on the sum of $15,000, to be paid to the defendant, William H. Bonnett, during his lifetime; and in and by said will it is directed that said sum of $15,000 shall be kept invested on bond and mortgage, the interest whereof to be paid to said defendant, William ¡H. Bonnett, during his lifetime.” It was then averred that the will had been proved before the surrogate of the county of ¡New York, and that letters testamentary had been issued to the defendants in this suit, one of whom was the said William H. Bonnett, as executrix and executor of Peter Bonnett, at different dates in September, 1850, and October, 1851, and that they had duly qualified.
The plaintiff claimed that he, as such receiver, was entitled to receive from the defendants the interest accruing on the $15,000 from the time of his appointment; and he averred that “ the defendants, as executrix and executor as aforesaid, had collected said interest on said $15,000 since the plaintiff was appointed receiver as aforesaid, and that, although the plaintiff had requested the defendants to render an account and to pay said interest to the plaintiff, they had neglected and refused to render such account, and to pay the interest or any part thereof to the plaintiff. The prayer was that the defendants render an account of, and pay the interest to the plaintiff, and for general relief.
The demurrer alleged that the plaintiff did not state in the complaint facts sufficient to constitute a cause of action against the defendants.
*17 The judgment in favor of the defendants was affirmed at a General Term, upon which this appeal was brought by the plaintiff.
The general questions raised by this appeal are, first, whether the interest of* the judgment debtor, William H. Bonnett, under the will of his late father, Peter Bonnett, was such an interest as could be aliened or disposed of by him; and if it was, then, secondly, whether it could be subjected to the payment of his debts, by a proceeding in imroii/wm, of the character instituted by the plaintiff?
1. The fund of $15,000, out of which the interest was to accrue, must be taken to consist of money and personal estate. The will is not set forth at large, and it may be that the fund was to bе created by the sale of real estate. But no such fact appears by the averments of the complaint; and if it did, the fund must still, upon the doctrine of equitable conversion, be considered and treated as personal.
(Kane
v.
Gott,
The article of the Revised Statutes which treats of uses and trusts, contains the following provision: “ho person beneficially interested in a trust, for the receipt of the rents and profits of lands, can assign, or in any manner dispose of such interest; but the rights and interest of every person, for whose benefit a trust for the payment of a sum in gross is created, are assignable.” (Vol. I, p.
730,
§ 63.) There is no difficulty, I think, in considering the leaving a sum of money in the hands of executors, to invest on interest, with directions to pay the interest as it accrues to an individual a trust. But the statute speaks only of the rents and profits of lands, and does not in terms at all apply to the interest of money, or the income of personal property. But it has been said that the provision prohibiting alienation is made applicable to trusts of personalty, by another provision of the Revised Statutes, contained in the title relating toaccumulation of personal property, and of expectant estates in such property.” (1 R. S.,
773,
§§ 1, 2.) After declaring, in the first of these sections, that the absolute ownership of personal property shall not be suspended, &c., except during the con
*18
tinuance of two lives in being at the date of the grant, or the death of the testator, if it be a will, it proceeds, in the second section, as follows: “ In all other respects, limitations of future or contingent interests in personal property, shall be subject to the rules prescribed in the first chapter of this act, in relation to future estates in lands.” The reference obviously is to the first article of the second title оf that chapter, which treats of the creation of estates in lands. (1 R. S., 721.) The greater part of the article is devoted to the definition of, and to the rules regulating estates in expectancy, which are divided into estates commencing at a future day denominated future estates, and reversions. (§§ 7 to 42, inclusive.) A variety of rules, as is well known, are laid down as to the creation of such estates. The term used in the law of real estate, to denote the act of prescribing by deed or will the commencement, the duration and the termination of such estates, is the
lÁmvvbi/ng
them, and the completed act by which they are thus created is called a
limitation
/ and one or the other of these words is used in that sense, in nearly every one of the thirty-five sections included in my quotation. These are the rules which, by section two, above mentioned, are attached to limitations of future and contingent interests in personal property. The provisions of the article concerning uses and trusts, in which the provision restraining alienation is found, relate to quite a different subject, and do not touch the subject of limiting future estates. They commence by abolishing uses and trusts of real estates, except as authorized and modified by that article; and they declare that every estate and interest in lands shall be deemed a legal right, cognizable as such in courts of law, except when otherwise provided in that chapter. (1 R. S., 727, §§ 45, 46.) The provision first cited, declaring the non-alienability of the beneficial interest of a trust for the receipt of the rents and profits of lands, is found among those provisions relating to uses and trusts in lands. The argument which would annex this provision to trusts of personal property, would be equally strong to bring that species of property within the influence of all the pro
*19
visiоns of the article concerning uses and trusts; and upon that position no trust of personal property could be created for purposes not within the scope of the fifty-fifth section of the article of uses and trusts. But the rule is notoriously otherwise. The vice of a tendency to a perpetuity is made equally fatal to disposition of both species of property by force of separate express' enactments, contained in the provisions applicable to each (1 R. S., 723, § 15; id., 773, § 1); but independently of this restraint, trusts may be created of personal property, for any purpose not unlawful by the general principles of law.
(Gott
v.
Cook,
Hence, I conclude that there is nothing in our statute law which restrains the alienability of the interest of the beneficiary in a trust to receive and pay over the interest of money or of personal property. If it should be asked upon what policy I conceive the legislature to have proceeded in the discrimination thus made between thé two species of property, in respect to arrangements which "are otherwise of so similar a character, the answer would be, in the first place, that we are dealing with the positive prescriptions of the written law, where the will of the legislature stands for the reason of its enactments. It may be further observed, that it was a leading object in the enactment of the Revised Statutes to simplify the law of real estate, and to prevent the title from being vested in one person while the right of enjoyment was in another. This was considered a public evil in respect to estates in land, and it had become a standing complaint, that titles were sometimes so complicated by the employment of trusts that creditors and purchasers were frequеntly misled and defrauded. The title to personal *20 property was rarely made the subject of trust dispositions of any intricacy. Its changeable and fluctuating character offered little temptation for making it the subject of settlements requiring the interposition of trusts. It was, therefore, no departure from the system of the revisers to leave trusts of personal estate as it found them.
There was another reason for rendering trusts for receiving and distributing the rents and profits of land inalienable, as to the interest of the beneficiary, which had no application to trust of money or personal property. The 55th section of the article of uses and trusts, as reported by the revisers and enacted by the legislature, authorized trusts of this description only for receiving the rents and profits of lands, and applying them to the education and support or either, of any person during the life of such person. (Subd. 3.) This would embrace only a limited class of transactions, as it would naturally be confined to the cases of infants and indigent persons, who had wealthy friends desirous of making a permanent provision for their bringing up and maintenance; and these were objects which would commend themselves to the special favor of the legislature. I have no doubt but that it was these considerations which ' led the authors of the system to exempt the income of land devoted to such meritorious'purposes from the general proscription of trusts in land, and, at the same time, to exempt the income of such trust estates in lands from the general policy of the law which renders all property of an individual liable to be appropriated to the payment of his debts. One provision was a counterpart of the other. The general principles established, by the new system werе relaxed in both instances in the interest of minors and destitute persons. Trusts for their benefit were tolerated, and at the same time a safeguard against the improvidence of the beneficiaries was provided by rendering their interest inalienable, and consequently not liable to be taken for their debts. The scope of the third subdivision was enlarged about a year after its passage, and a few weeks after it took effect, by substituting the word me for education and support *21 (Laws 1830, p. 386); and the provision, as thus amended, has been construed so as to embrace trusts for the direct and unqualified payment of the rents and profits of lands to the beneficiaries. (Leggett v. Perkins, 2 Comst., 297.) In giving a construction to any portion of the system as originally enacted, any reference to other parts, which its elucidation may require, must be to such other parts as they stood when the system as a whole was first adopted. The abolition of trusts, except as authorized by the 55th section, and which embrace only trusts of real estate, and the provision inhibiting the alienability of the interest or the cestui que trust, are parts of one system, and the latter is restricted to the same species of property as the other.
Plain as this conclusion seems to me to be, it has been the subject of some conflicting decisions. In
Hallett
v.
Thompson
(
The case of
Gott
v.
Cook
came before Chancellor Walworth in 1839. An estate composed of real and personal property was put in trust, the rents, profits and interest being disposed of in a manner creating, as it was claimed, an unlawful perpetuity. As to the part which was personal, the impediment to the absolute ownership consisted in the alleged inability of the beneficiaries to alien their interests. The chancellor held the trust unlawful as to both species of property, and predicated his judgment upon the section of the article of uses and trusts which forbids the alienation of the interest of the
cestui que trust,
in a trust to receive the rents and profits of land (§ 63); and this he held to be
*22
attached, by reference, to trusts of personal property by the second section of the title concerning expectant еstates in personal property, which I have referred to. (
In Grout v. Van Schoonhoven (1 Sandf. Ch., 336), decided in 1840, the question we are considering came before the late assistant vice-chancellor of the first circuit, and was examined with great care. It is obvious that he had before him the several cases upon that question which had then been adjudged and to which I have referred. His conclusion is expressed as follows: “It is thus perfectly plain that the provisions against the aliening of trust interests in lands have no application to a vested interest in possession under a trust of personal estate. I have perhaps been more minute in the demonstration than was necessary, because in one or two instances where trusts of real and personal property were created by the same deed the courts have blended them together without discrimination in speaking of the inalienability of trusts.”
The principle involved in this discussion is one of very gréat practical importance. It is no less than this: whether it is in the power of owners of personal property tо dispose of the whole beneficial interest in it, in such a manner that the grantee or donee may hold and enjoy it without its being- liable for his debts. The statute does not limit the amount which may thus be held in trust, and takes no account of the circumstances or needs of the beneficiaries. Fortunes of any amount may thus be conveyed, and their beneficial owners, if they will spend his income as it is received, no matter in what kind of luxury or extravagance, or give it away, may put their creditors, who will probably have trusted them upon the credit which their apparent circumstances have inspired, at defiance. It may be said that this may be done where the subject of the trust is real estate; and that is true. I have endeavored to show that this is the result, not of any intelligent legislative intent, but of an inadvertence in omitting to alter the provision as to inalienability of trusts, when the purposes for which trusts of lands were tolerated were changed from provisions for education and support, into an unlimited control of the income. But I do *25 not maintain that it is competent for the courts to deny the consequence which results from the declared inalienability of the interest of the beneficiary in trusts of land, though they may see ever so clearly that the provision as it stands was the result of an oversight on the part of the legislature. But in regard to trusts of personalty, I do not fiad any such provision in the statutes.
By the common law and the doctrines of courts of equity, the interests of the beneficiary in such trusts were the subjects of the resort of their creditors. They would pass under the bankrupt and insolvent laws and might be reached by the creditors by proceedings in equity.
(Bryan
v.
Knick
erbocker,
2. But there is another provision of the ¡Revised Statutes, by which, at first, I felt more embarrassed than by those which I have thus far considered; but which, after a good deal of consideration, I have concluded does not stand in the way of the plaintiff. The statutory provision enabling judgment creditors to reach the choses in action, and personal property of the debtor, and property held in trust for him, is in the article relating to the jurisdiction of the Court of Chancery. (2 R. S., 173, §§ 38, 39.) The first of these sections provides for a bill for discovery of the debtor’s property, money or things in action,
or held im, trust for
him, and for an injunction restraining him from disposing of it, “ except where such trust has been created by, or the fund so held in trust has proceeded from some person other than the defendant himself.” The next section empowers the court to decree satisfaction of the judgment, “ out of any personal property, money or things in action belonging to the defendant, or held in trust for him,
with the exception above
stated&c. The exception in each section was inserted by the legislature, the draft reported by the revisers containing no exception. (3 R. S., 2d ed., p. 669.) I am of opinion that the authority
*26
which the courts now possess, to subject such property to the payment of judgments, is derived horn this legislation.. Though, the better opinion may have been that courts of equity had an inherent power over the subject before the statute, it was not a settled point, the decisions being contradictory. (3 R. S., 2d ed., p. 669;
Hadden
v. Spadder,
The effect of sections 38 and 39 was again spoken of by the chancellor in
Degraw
v.
Clasen
(
The Supreme Court, under our present system, has taken a different view of these sections. In
Stewart
v.
McMartin
(
A single оther case upon these sections remains to be mentioned, Bra
mball
v. Ferris, recently decided in this court (
I am of opinion that neither of the theories upon which it has been attempted to construe these sections is sound. The exception is general, embracing both kinds of property, and it cannot therefore refer to and be limited by the provision rendering inalienable the interest of cestui que trust in trusts of real estate. There is no such language as would confine it to the surplus beyond what might be needed for the education and support of the beneficiary. These suppositions are pure conjectures. What, then, is the meaning of the exception in the 38th and 39th sections ? In my opinion it is simply this: that where a trust has been created by some other person than the defendant, or funds held in trust have proceeded from some other person than the defendant, satisfaction of the creditor’s judgment is not to be decreed out of such trust funds. In other words, the trust is not to be subverted or destroyed, and the property or money so placed in trust is not to be taken by the creditor where it has proceeded from another party. If a debtor will make a conveyance of his own money or lands in trust for himself, the *30 property so put in trust, or, in the words of the statute, so held in trust for him, is to he applied to the payment of his debts; but if a relative or other person will crеate a trust for his benefit, though the property is in a legal as well as a popular sense held in trust for him, as it was not his property before being embraced in the trust, it is not to be disturbed. It was to guard against a possible construction of the general words which would allow the trust fund itself to be taken, that the exceptions were introduced by the legislature. There is not one word said respecting the income of the trust funds. It is a common device of fraudulent debtors to convey their .property upon trusts for their benefit, and one branch of the statute of frauds is aimed at that practice; and hence this statute, in terms, subjects all property and things in action, held in trust for the debtor, to the satisfaction of the judgment; but as a trust created by another for his benefit, would fall within the general words of the act, the trust fund was, by abundant caution, protected by the introduction of the exception. A construction which should embrace the income which belongs absolutely to the debtor, within the exception, would form an anomaly in the law. The most enormous incomes could be held and enjoyed with a perfect immunity against the ordinary liability which the law imposes upon every other person, of having his property taken for the payment of his debts. Ho one can deny that it would violate all legal analogies of the law of debtor and creditor, and the soundest principles of public policy and morality, to give this effect to the sections of the statute in question. I do not think their language requires, or will permit it.
My conclusions upon the whole case are the following:
1. This being a trust of personal property, is not within the statute of uses and trusts of land. The provision establishing the inalienability of the interest of the beneficiary in that class of trusts, has, therefore, no application.
The continued existence of such a provision, in respect to „rusts of lаnds, since it has been determined that such trusts may be created to pay over the rents and profits, is the *31 result of inadvertence; but it is an inconvenience that cannot be remedied by the courts.
2. The sections of the statute relating to the jurisdiction of the Court of Chancery, which except trust property from being reached by creditor’s suits, refer to the property itself which is held in trust, and not to the interest or income which by its terms belongs to the beneficiary.
3. The plaintiff is entitled to have his judgment satisfied, out of the interest payable to William H. Bonnett, upon the sum of $15,000, held in trust for his benefit; but the title and interest of the executors, as trustees, is not to be interfered with, and the trust fund is not to be touched. ;
If these positions are sustained by the judges, the judg-' ment of the Superior Court must be reversed, and judgment rendered for the plaintiff; the record to be remitted, to enable the Superior Court to proceed in the case according to law and the practice of that court.
Johnson, J., concurred with Denio.
Judgment affirmed.
Notes