delivered the Opinion of the Court.
*297 In this сase we decide that spendthrift provisions in a trust are valid in Montana, and that judgment creditors of a beneficiary under a spendthrift trust may not execute upon the proceeds due from the spendthrift trust to the beneficiary before distribution by the trustee.
First Interstate Bank appeals from a judgment of the District Court, Eleventh Judicial District, Flathead County, which ordered the bank as trustee to pay to judgment creditors the income due to the beneficiary of a spendthrift trust. We reverse.
There are four issues on appeal. First, does the Bank have standing to appeal? Second, did the District Court have jurisdiction over the Bank? Third, can a judgment creditor reach income from a spendthrift trust before the income has been distributed to the beneficiary? Fourth, should the spendthrift provision be applied under the facts and circumstances of this case?
The plaintiffs-respondents in this case made unsecured loans to William S. Hoglund in 1970. William Hoglund’s father, Stewart Hoglund, died testate in 1980. Four days after his father’s death, William Hoglund assigned his distributive share of his father’s estate to the respondents. At the same time he confessed judgment to the respondents.
Stewart Hoglund’s will established a testamentary trust with a spendthrift provision. The will named First Interstаte Bank as trustee. The will provided that William was to receive two-thirds of the trust income during his life. On William’s death the trust principal would be divided among Stewart's grandchildren.
By writs of execution, the respondents, as judgment creditors, attempted to levy on the trust income due to William in the hands of the trustee, prior to the time it was paid. The trustee returned the writs of execution unsatisfied saying all the money was held in a trust under a spendthrift provision.
The judgment creditors instituted supplemental proceedings and the chief trust officer of the Bank was summoned to be examined regarding the trust provision. After the hearing, the judgment creditоrs moved for an order directing the Bank as trustee to pay the income from the trust to the judgment creditors. The District Court entered a judgment ordering the Bank as trustee to pay all income due to William Hoglund from the trust to the judgment creditors.
The first issue on appeal is whether the First Interstate Bank has standing to аppeal the order of the District Court directing it to *298 pay the spendthrift trust income directly to the judgment creditors. The Montana Rules of Appellate Civil Procedure state:
“A party aggrieved may appeal from a judgment or order ... in the following cases: . . . (c) From a judgment or order . . . allowing . . . the рayment of a debt. Rule 1, M.R.App.Civ.P.”
The respondents contend the Bank does not have standing to appeal because the Bank was neither a party nor an intervenor in the litigation below and the Bank has no individual interest in the outcome of the litigation. Although the Bank was not a party below, it is the subjеct of an order by the District Court directing it to pay trust income to the judgment creditors.
Non-parties are allowed to appeal if they are aggrieved by a court order.
Holter v. Moore and Co.
(Colo. App. 1983),
The second issue on appeal is whether the District Court had jurisdiction over the Bank. This action began as supplemental proceedings to discover the assеts of William Hoglund. The Bank contends it was not a party to the proceedings and became involved only after the District Court ordered it to pay the income of the trust in violation of the spendthrift provision. The Bank contends the validity of the spendthrift provision can be addressed only in a plenary рroceeding as provided by Section 25-14-104, MCA, which states:
“25-14-104. Procedure when debt to or ownership of judgment debtor denied. If it appear that a person or corporation alleged to have property of the judgment debtor or to be indebted to him claims an interest in the property adverse to him or denies the debt, the court or judge may authorize, by an order made to that effect, the judgment creditor to institute an action against such person or corporation for the recovery of such interest or debt; and the *299 court or judge may, by order, forbid a transfer or other disposition of such interest or debt until an action can be commenced and prosecuted to judgment. Such order may be modified or vacated by the judge granting the same or the court in which the action is brought, at any time, upon such terms as may be just.” (Emphasis added.) However, in this case there is no one who claims an interest in the trust adverse to the judgment debtors or denies the debt. The issue here is not whether William Hoglund owes the debts or whether the trustee has prior claim to the trust assets over the judgment creditors. The issue is the validity and effect of a spendthrift provision in a Montana trust. This is an issue of first impression.
The vast mаjority of states which have considered the validity of spendthrift provisions have found them valid.
Nichols v. Eaton
(1875),
Spendthrift provisions in trusts are generally upheld on one of two policy grounds. First, the intentiоn of the testator, as far as possible, should be given effect by the courts. Traditionally, a testator who gives without any pecuniary return can attach conditions to the gift during the life of the donee. “Why a parent, or one who loves another, and wishes to use his own property in securing the object of his affection, as far as property can do it, from the ills of life, the vicissitudes of fortune, and even his own improvidence, or incapacity of self-protection, should not be permitted to do so, is not readily perceived.”
Nichols v. Eaton
(1875),
Second, spendthrift provisions are upheld because the creditor has no reason to rely on assets or income from a spendthrift trust. “[I]nasmuch as such a gift [in a spendthrift trust] takes nothing from the prior or subsequent creditors of the beneficiary to which they previously had the right to look for payment, they cannot complain that the donor has provided that the property or income shall go or be paid personally to the beneficiary and shall not be subject to the claims of creditors.”
Huestis v. Manley
(1939),
We hold spendthrift provisions to be valid in Montanа. The spendthrift provision at issue here states:
“No interest of any beneficiary of any trust created hereunder shall be subject to sale, assignment, pledge, or transfer by any beneficiary in any form or manner whatsoever, nor shall the principal of the trust or the income arising therefrom be liable for any debt of or any judgment against any beneficiary through the process of any court.”
This provision makes the attempted assignment by William Hoglund invalid. However, the judgment creditors can still execute on their judgment, after the trust income has been paid to the beneficiary. Restatement of Trusts, Section 152, comment j.
Respondent contends that Section 72-24-210, MCA, controls here. That section states:
“72-24-210. Profits of land liable to creditors in certain cases. When a trust is created to receive the rents and profits of real property and no valid direction for accumulation is given, the surplus of such rents and profits, beyond the sum that may be necessary for the education and support of the persons for whose benefits the trust is created, is liable to the claims of the creditors of such person in the same manner as personal property which cannot be reached by execution.”
Section 72-24-210, MCA, has not been interpreted in Montana. However, in California a substantially similar statute was interpreted as a statutory limitation on the power to create spendthrift trusts.
Canfield v. Security First National Bank
(1939),
We have long adhered to the principle that where a sister state has a statute similar to ours, we should give consideration to the construction it received in the courts of the sister state. However, that construction is not binding upon this Court.
Cahill-Mooney Const. Co. v. Ayres
(1962),
In construing Section 72-24-210, MCA, we begin with the plain language of the statute, “[w]hen a trust is created to receive the rents and profits of real property and no valid discretion for accumulation is given . . .” Section 72-24-210, MCA. A number of states have held the language of this statute should be construed to mean what it says. Minnesota and Wisconsin courts have held statutes similar to Section 72-24-210, MCA, apply only to trusts of real property.
In re Schmidt’s Will
(1959),
The second phrase of the statute requires that “no valid direction for accumulation be given.” This clause was construed in
In re
*302
Estate of Lawrence
(1968),
In the case at hand, the record shows the trust is made up of personal property and three contracts for deed, which under the doctrine of equitable conversion are personal property to the seller.
In re Estate of Rickner
(1974),
“Any income not so distributed shall be accumulated and added to principal.”
This is a valid direction for accumulation, thus Section 72-24-210, MCA, does not apply to the Stewart Hoglund trust.
The fourth issue is whether the spendthrift provision should be applied under the facts and cirсumstances of this case. Respondents contend that they should be entitled to execute on the trust funds in the hands of the trustee because of four theories: waiver, renunciation, estoppel and equity. Respondents contend that the assignments made by William Hoglund constitute waivers of the right to recеive income from his father’s trust. We hold the assignments made by William Hoglund are void under the terms of the spendthrift trust. An attempted transfer of an interest in a spendthrift trust is not binding on the trustee:
“An attempted transfer of the interest of the beneficiary under a spendthrift trust is generally treated as void, subject to the qualifications hereinafter discussed. It need not be respected by the trustee, the assignee cannot enforce it, and the beneficiary is not bound by it, although if he has received consideration for it, he may be required to make restoration to the attempted assignee. The character of the trust doеs not prevent the beneficiary from contracting to pay over the benefits of the trust after the beneficiary has received them.” G. Bogert, Trusts and Trustees Section 226 (2d ed. 1966).
Respondents also contend that the assignments which William Hoglund signed constituted renunciation of his interest in his father’s estate pursuant to section 72-2-101, MCA. That section allows a person to renounce their interest under a testamentary or nontestamentary instrument. William Hoglund has not renounced his share of the testamentary trust under the requirements of section 72-2-101, MCA.
*303 The assignments did not declare the renunciation nor properly describe the interest renounced. The assignments were not received by the trustee of the trust within nine months after the date of the creation of the trust. In addition, even if William Hoglund had renounced his share of the trust, the property would devolve as though he had predeceased the testator. Section 72-2-101, MCA. Thus the trust income would go to Stewart Hoglund’s grandchildren not to the judgment creditors.
Next, respondents argue the Bank and William Hoglund are estopped to deny the assignments. They contend they relied on the assignments made by William Hoglund to their detriment, therefore they should be able to reach the income of the Stewart Hoglund trust. This argument ignores the fact that the assignments were promises made by William Hoglund, not by Stewart Hoglund. Stewart Hoglund made no assignments or promises to the judgment creditors. Stewart Hoglund’s testamentary intent in setting up the trust should be fulfilled. We hold the trustee and the beneficiary are not estopped to deny the assignments.
Finally, respondents cоntend they should be paid from the trust income because other debts were paid by the estate. The estate paid debts which Stewart personally guaranteed since they were a direct liability. Debts owed by William to the estate itself are being repaid by partial offsets against William’s share of the trust income. We find that neither of these kinds of payments has any effect on the application of the spendthrift clause in this case. Debts paid by Stewart Hoglund or guaranteed by Stewart Hoglund during his lifetime are not subject to the trust with the spendthrift clause. The repayment by William Hoglund of the debt owed to the еstate innures to the benefit of the grandchildren of Stewart Hoglund, and fulfills his testamentary intent. A beneficiary of a spendthrift trust may order the trustee to pay trust income to another for the benefit of the beneficiary. G. Bogert, Trusts and Trustees, Section 226 (2d ed. 1966). Thus, in this case, the trust income is protected by a spendthrift clause and the judgment creditors may not reach the income until after its distribution.
We reverse the order of the District Court and remand with directions to dismiss with prejudice.