69 Md. 77 | Md. | 1888
Lead Opinion
delivered the opinion of the Court.
The testator devised certain real estate to his friend John R. Fountain in trust to collect the rents and profits, and to pay the same to his son Robert, “into Ms oicn hands, and not into another, whether claiming by his authority ar otherwise,” and apon his death to convey said real estate, to such children of his son Robert as may be living at the time of his death.
Upon the construction of this clause of the testator’s will two questions arise: First, did the testator mean to give the income of the property to his son to the exclusion of his creditors, and secondly, if so are the terms and provisions of the will effectual to carry out this intention. There can be no difficulty whatever as
The next point, is one of more than ordinary importance, and has not heretofore been decided by this Court. A great deal may be said on both sides, and the question is not free of difficulty. In England the decisions are all one way, and it is well settled there, that the devise of an equitable estate or interest for life to any person, other than a married' woman, carries with it, as a necessary incident to such estate or interest, the right of alienation by the cestui que trust, and is liable for the payment of his debts, and no provision by way of inhibition or otherwise, which does not operate as a cesser or limitation over of the estate, can protect it against the claims of creditors. Brandon vs. Robinson, 18 Ves., 429; Rochford vs. Hackman, 9 Hare, 480; Graves vs. Dolphin, 1 Sim., 66; Green vs. Spicer, 1 Russ. & Myl., 395; Younghusband vs. Gisborne, 1 Collyer, 400.
In this country, however, the decisions are conflicting, and the Supreme Court of the United States, and the Supreme Courts of other States, have, after full consideration of the English cases, held, that the power of
“But the doctrine, that the owner of property in the free exercise of his will in disposing of it, cannot so dispose of it, but that the object of his bounty, who parts with nothing in return, must hold it subject to the debts due his creditors, though that may soon •deprive him of all the benefit sought to be conferred by the testator’s affection or generosity, is one which we are not prepared to announce as the doctrine of this Court. * * * blor do we see any reason, in the recognized nature and tenure of property and its transfer by will, why a testator who gives, -without any pecuniary return, who gets nothing of property value from the donee, may not attach to that gift, the incident of continued use, of uninterrupted benefit of the gift, during the life of the donee.” Nichols, Assignee vs. Eaton, et al., 91 U. S., 725, 727.
And in the still later case of Broadway National Bank vs. Adams, 133 Mass., 170, argued in June, 1881, and re-argued in March, 1882, the Court unanimously held, that property may be conveyed in trust, with the provision that the income shall not be alienated by the beneficiary by anticipation, or be subject to be taken by his creditors in advance of its payment to him, although there is no cesser or limitation over of the estate in such an event. Mortox, C. J., says: “We are not able to see that it would violate any
And then again in Rife vs. Geyer, 59 Penn., 393,, Judge Shabswoou speaking for the Court says: “ That a benefactor has the power of thus restricting the enjoyment of his bounty through the medium of a trust during the life of the beneficiary is now the .unquestionable law of this State.” In Shankland’s Appeal, 11 Wright, 113, the point was expressly decided, and it-was there held that a trust to collect and receive rents- and pay over the same to a son of the testatrix for and during the tenn of his natural life, without being subject to his debts and liabilities was an active one, and that the legal estate was vested in the trustee, and no act of the cestui que trust could deprive him of it, or allow him to interfere with the collection of the income, and no creditor could touch the income or any interest which the cestui que trust had in it.
In Vermont, Connecticut and Kentuckjr, the highest-Courts have held that the income of property may be devised in trust for the benefit of the cestui que trust for life to the exclusion of the claims of his creditors. Ex’rs of White vs. White, 30 Vert., 338; Leavitt vs. Beirne, 21 Conn., 1; Pope’s Ex’rs vs. Elliott, 8 B. Mon., 56.
In other States, however, and it may be said in the-majority of the States where the question has arisen, the English rule has been adopted without qualification. Tillinghast vs. Bradford, 5 R. I., 205; Pick, vs. Pitchford, 1 Dev. & Batt. Eq., 480; Heath vs. Bishop, 4-
In this State there is no decision to govern us, and with conflicting decisions in other Courts entitled to the highest consideration, the question is one after all to be determined by us on principle. The English decisions rest on two grounds, first, that the right of alienation is a necessary incident to an equitable estate for life,.and any restraint upon this right is against the policy of the law which favors the ready alienation of property; and secondly, that public policy forbids that one should have the right .to enjoy the income of property, to the exclusion of his creditors. Now the right to sell and dispose of property, is a necessary incident of course to the absolute ownership of such property. You cannot give to one a fee simple interest, and then say he shall not sell or dispose of it, because the right to alien it, is a legal and necessary incident to the estate granted, and to impose such a condition would be repugnant to the nature and tenure of the estate itself. And besides the best interests of the public require that there should be a ready transmission of property. But the reasons on which the rulé is founded do not apply to the transfer of property in trust. Where by the terms of the trust, the legal estate is vested in a trustee he takes the legal titlwith the necessary incidents attached to it, and among such incidents is the right to alien it. The cestui que trust takes the equitable estate with the right to the accrued income, and when this has been paid to him, the absolute right to dispose of it. So neither the principal, nor the income can be said to be inalienable. And besides, the policy of the law is not against all restraints on the absolute right to dispose of it. You may give one an estate for life, with a provision that the estate shall go over to a third person upon aliena
And then as to the other ground, that it is against the policy of the law to permit one to hold' and enjoy an estate or interest in property for life, whether legal or equitable, to the exclusion of his creditors. Now common honesty requires, of course, that -every one should pay his debts, and the policy of the law for centuries has been to subject the property of a debtor of every kind which he holds in his own right, to the payment of his debts. He has as owner of such property the right to dispose of it as he pleases, and his interest is, therefore, liable for the payment of his debts. But a cestui que trust does not,hold the estate or interest in his own right; he has but an equitable and qualified right to the property or to its income, to be held and enjoyed by the beneficiary on certain terms and conditions prescribed by the founder of the trust. The legal title is in the trustee, and the cestui que trust derives his title to the income through the instrument by which
Judgment affirmed.
Dissenting Opinion
filed the following dissenting opinion in which Bryan, J., concurred:
I. am quite aware that dissenting opinions are often regarded as useless and ungracious work; but, with my settled convictions in' regard’to the principles involved in this case, I cannot do otherwise than enter my dissent from the opinion of the majority of' the Court; and I think it proper to state the reasons of that dissent.
This is an attachment proceeding instituted to reach and subject to condemnation the rights and interest of Robert J. W. Garey, the debtor, accruing under his father's will,—such interest being iii the hands of a trusted, in whom the legal estate in the land is vested, and whose duty it is, by the terms of the will, to receive and pay over the annual rents and profits of the estate to the son for life. This right and estate of the son is limited by the testator, thus: “That he [the trustee] shall pay or cause to be paid unto my son, Robert J. W. Garey, as the same may accrue, the net rents, income and profits arising from said farm and property, after dedxicting such sums of money as may be necessary to satisfy and pay the taxes and assessments levied thereon, and needful repairs to buildings
It is insisted, on the part of the debtor, the devisee for life, that the right and estate devised to him, by the clause of the will just quoted, cannot he-made liable to the payment of his debts, and that he is entitled to receive and enjoy the rents and income of the estate for his life, in utter defiance of all effort by his creditors to reach sich rents and income by legal process. And this contention is fully sustained by the opinion of the majority of this Court, but to which I cannot for a moment assent.
Upon the contention of the debtor, the beneficial devisee for life, two questions arise: 1st, Whether the testator, by devising the legal estate to a trustee, with directions to pay over the rents and profits to the son for life, could lawfully impose a restriction upon the ordinary right of alienation of such equitable life estate, or protect such estate from all liability for the debts of the son, without any cesser of the estate devised; and, 2ndly, whether, if the testator had such right, he has effectually exercised the same, by the terms employed in the will.
1. As will be observed, there is no -cesser or termination of the estate provided for, in respect to the devise to the son, in the event of attempted alienation, or seizure by creditors. The rents and profits of the farm are simply directed to be paid over to the son him
I had supposed that if there was any principle well settled in the law of property, it was that upon any gift or grant of a beneficial fee simple or life estate, whether legal or equitable, there was an incident pertaining to such estates that could not be severed, and that was the right and power of the donee or grantee to alienate the estate, and to charge it with his debts. And that any attempt to restrain the exercise of such right and power, except by way of cesser or limitation over of the estate, would be regarded as repugnant to the estate, and therefore without effect. This is certainly the well established doctrine in that system of jurisprudence from which we derive both the principles of the common law as applied here, and the principles and doctrine of trusts as applied and enforced by our Courts of Chancery. And it is an undeniable proposition that, as a general rule, Courts of equity, in regard to trust estates, adopt the rules of law which are applicable to legal estates; or, in other words, in regard to trusts, the analogy to estates at the common law is not only followed, as to the rights and interests of the cestui que trust, but also as to the remedies to enforce, preserve, and extinguish those rights and interests. 1 Sand., Uses & Trusts, 269; 2 Sto. Eq. Juris., secs. 974 a, 975. According to the rule of the English law, therefore, whatever rights in property a man may acquire and hold beneficially, whether legal or equitable, he may alienate; and it is equally clear that whatever a man
As I have already stated, there is no reverter to the estate of the testator, or limitation over, upon any attempted alienation, or seizure of the interest of the devisee for life, by creditors. But it is supposed that the interest of the devisee for life is effectually hedged against his creditors by the simple direction that the rents and income should be paid “into his own hands, and not into another, whether claiming by his authority or otherwise.” To such contention I cannot assent.
The whole theory and,history of the English law is against such contention. In Coke upon Littleton, page 223a, Sir Edward Coke, in his commentary upon sect. 360 of Littleton, which treats of conditions against alienations as being void, says: “The like law is of a devise in fee upon condition that the devisee shall not alien; the condition is void; and so it is of a grant, release, confirmation, or any other conveyance, whereby a fee simple doth pass. For it is absurd and repugnant to reason that he, that hath no possibility to have the land revert to him, should restrain his -feoffee in fee simple of all his power to alien. A.nd so it is if a man be possessed of a lease for years, or of a horse, or of any other chattel, real or personale, and give or sell his whole interest or propertie therein, upon condition that the donee or vendee shall not alien the same, the same is void, because his whole interest and propertie is out of him, so as he hath no possibilitie of a reverter; and it is against- trade and traffique, and bargaining and contracting between man and man.” And in Butler’s note to the Commentary on the next section of Little-ton, it is said, that “A power of suffering a common recovery, and of levying a fine within the Statute of 4
Such then being the well settled and established principle in respect to the grant or devise of estates in fee simple or fee tail, (and this I do not understand to be anywhere controverted,) why should there be a different principle applicable to estates for life? The reason of the, principle against restraint of alienation and liability for debts, is the repugnancy of such restraint to the ordinary rights of property, and that property would thereby be withdrawn from the ordinary rules and channels of commerce and traffic among men. Why should a life estate, either legal or equitable, be tied up and fettered, it may be, for the greater part of a century, when the restraint upon alienation, either voluntary or by process of law, of an estate in fee or fee tail will not be tolerated at all? The English Courts have consistently and steadily refused to recognize any such distinction, but treat the right of alienation and liability for debts as inseparable incidents of the life estate, whether limited by way of trust or otherwise, except where there is a reverter or a cesser of the estate, dependent upon an attempted alienation, or seizure by creditors. This was laid down by Lord Eldox in Brandon vs. llobinson, supra, not as a novel or néwly invented rule of property, but as the settled law of England ; and in the course of his opinion he referred to the old case of Foley vs. Burnell, 1 Bro. C. C., 274, in regard to which he said: “A great variety of clauses and means was adopted by Lord Eoley with the view of depriving the creditors of his sons of any resort to their property; but it was argued here, and, as I thought, admitted, that, if the property was given to the sons, it must remain subject to the incidents of
There are many cases in which the rule has been stated and applied, but in none more clearly than in Rochford vs. Hackman, 9 Hare, 475, 480, by the Vice-Chancellor, Sir George Turner. In that case he says, “First, property cannot he given for life any more than absolutely, without the power of alienation being incident to the gift; and that any mere attempt to restrict the power of alienation, whether applied to an absolute interest or to a life estate, is void, as being inconsistent with the interest given; and secondly, that although a life-interest may be expressed to be given, it may well be determined by an apt limitation over.” He further declares, “That property cannot be given for life any more than absolutely, without the power of alienation being incident to the gift, appears to me to he well settled by the cases of Brandon vs. Robinson, 18 Ves., 429, and Graves vs. Dolphin, 1 Sim., 66. In both of those cases there were gifts for life, with provisions which were directed against alienation, but in neither of them was there any proviso for determining the life-interest, or any gift over in the event of alienation; and the Court, in each of those cases, held that
There is one well recognized exception to the general rule upon this subject, but that exception is sui generis, and is founded upon its own special reasons and policy. That exception is expressed in the usual clause against anticipation, in devises to and settlements upon married women, introduced in the time of Lord Chancellor Tiiurlow, for their special protection. This exception, and the reasons for it, have been well stated by the late Master of the Rolls, Sir George Jessel, in Bucklon vs. Hay, 11 Ch. Div., 645. In that case, the Master of the Rolls said: “In the first place, the law of this country says that all property shall be alienable; but there has been one exception to that general'law, for restraint on anticipation or alienation was allowed in the case of a married -woman. That was purely an equity doctrine, the invention of the Chancellors, and is, as I have said, an exception to the general law, which says that property shall not be inalienable. That exception was justified on the ground that it was the only way, or at least the best way,, of giving property to a married woman. It was considered that to give it to her without such restraint.would be, practically, to give it to her husband, and therefore, to prevent this, a condition was allowed to be imposed restraining her from anticipating her income, and thus fettering the free
It is certainly not the fact, as has been sometimes suggested, that the English cases, to which I have referred, introduced any novel doctrine into the law. On the contrary, it has been very truthfully said, that they simply make application of a principle older than Taltarum’s Case. The history and growth of the English law, its principles and remedies, as they have been formulated from time to time, down to the most recent time, prove this. Indeed, the great merit of the celebrated rule in Shelley’s Case is, that it frustrates all unreasonable restraints upon alienation, and renders property liable for debts. As said by Professor Gray, in his admirable little treatise on the Restraints on the-Alienation of Property, see. 168, those cases are a part of the struggle of the law against feudalism, and against the attempt to give' the enjoyment of wealth without its responsibilities.
The course of legislation in this State aptly illustrates the policy, and shows the same tendency to-unfetter property, and to remove all restraints upon alienation, and to subject all interest in property to the debts and obligations of its owner. Just about the close of the war of the Bevolution, we find the Act of 1782, ch. 23, for simplifying the method of docking estates tail; and four years thereafter, we have the Act of 1786, ch. 45, directing the course of descents and converting estates tail general into fee simple-estates, and thus rendering such estates liable to debts. And then the Act of 1810, ch. 160, embodied in the Code, Art. 83, secs. 1, 2, provides that any and all
Indeed, no system of law can be founded in wisdom or sound public policy, that allows restraints upon
It appears that there are a few State Courts, prominent among which are the Courts of Pennsylvania and Massachusetts, by which trusts, popxilarly known as Spendthrift tnists, whereby restrictions upon alienation and the liability for debts of the devisee or legatee for life, have been supported. But, until this case, no such trust has ever received the sanction of this Court; and the restrictive trust maintained in this case is purely one of judicial establishment. It is supposed, however, that the recent case of Nichols vs. Eaton, 91 U. S. 716, has furnished authority for the rejection of the doctrine of the English Courts, and the adoption of this species of trusts in this State. But what was said in that case, in regard to such trusts, was entirely obiter, and was
It is manifest, I think, from this passage from the opinion, that what was said by the learned Justice, in apparent approval of the American cases cited by him, was merely obiter, and was not really intended to be anything more. The case originated in the State of Rhode Island, and the appeal was from the Circuit Court for the district of that State. In that State the doctrine of the English Courts prevails to its full extent and without qualification, and is therefore a rule of property- in that State. In Tillinghast vs. Bradford, 5 R. I., 205, cited both in the argument and in the opinion in Nichols vs. Eaton, the Supreme Court of Rhode Island held, in reference to a devise in trust for life of an income, to be paid to the devisee, and not to his assigns or to others, that an assignee for the benefit of creditors was entitled to have the income paid over to him. The Court, in its opinion, said: “ This has been the settled doctrine of a Court of Chancery, at least since Brandon vs. Robinson, 18 Ves., 429, and, in application to such a case as this, is so honest and just that we would not change it if we could. Certainly no man should have an estate to live on, but not an estate to pay his debts with. Certainly property available for the purposes of pleasure or profit should be also amenable to the demands of justice.”
The length of this opinion renders it necessary that I should refrain from making special reference to the many American decisions upon this subject; but they have been fully collated and ably reviewed by Professor Gray, in his treatise on the Restraints on Alienation of
There is one case to which 1 will refer, and that is Broadway National Bank vs. Adams, 133 Mass., 170, much relied on in this case. That case, as it appears to me> is somewhat remarkable, though I do not perceive that it has much application to the case before us. In the opinion of the Court it is conceded, that, by the rules of the common law, such restraint upon alienation or liability for debts as was there imposed, would not be valid. “But,” says the Court, “the reasons of the rule do not apply in the case of a transfer of property in trust. By the creation of a trust like the one before us, the trust property passes to the -trustee with all its incidents and attributes unimpaired. He takes the whole lega] title to the property, with the power of alienation; the cestui que trust takes the whole legal title to, the accrued income at the moment it is paid over to him. Neither the principal nor the income is at any time inalienable.” 'Now, if the learned Court intended, by what was said by it, to lay it down as a general principle, that in any and all cases where the legal estate may be vested in a trustee, the power of alienatiou exists, irrespective of the special nature of the trust declared, and though alienation might be a breach of that trust, and that therefore the rule against restraints on alienation would not be violated, such proposition, I submit, would not stand the test of reason. The trustee holds the legal estate to serve the purposes of the trusts; and, except under special authority given, he cannot alienate the legal estate without committing a breach of trust, and the alienee would take the estate subject to the trust, and the conveyance be liable to be set aside. As I understand
2. Rut suppose the law to be as contended for by the appellant,—that it is competent to a testator or the founder of a trust, by the use of apt terms, to exclude the power of alienation by the cestui que, trust for life, and all liability for his debts, the question then arises, has such restriction been effectually imposed in this case? As has been noticed, the only terms in the devise upon which reliance is placed for excluding the rights of the creditors, are those employed in the direction to the trustee, that, after certain deductions for necessary purposes of the farm, the net rents and profits shall he paid into the hands of the son,
I am of opinion therefore, upon both grounds, that the fund was attachable for the debts of the cest-ui que trust; and under the facts agreed on, I can perceive no difficulty in rendering judgment of condemnation, according to the practice recognized in Early vs. Dorsett, Harris & Co., 45 Md., 462. The judgment below, according to my view, ought to he reversed.
(Filed 12th June, 1888.)