Hill v. McRae

[BILL IN EQUITY BY JUDGMENT CREDITO», who has exhausted his legal remedies, TO SUBJECT DEBTOR’S EQUITABLE ESTATE.] 1. Debtor’s beneficial interest in property bequeathed to trustee for use and benefit of him and his family, but not to be liable foi• his debts, cannot be subjected in equity by his creditoi's. — A "bequest to a trustee of a certain stare of the testator’s estate, “ for the use and benefit of Ms son Thomas”, contained these provisions: The property was to be held, used, and managed by the trustee, who was also empowered, with the assent of the said Thomas, to sell the slaves, and to reinvest the proceeds of sale in other property to be held on the same trust. The trustee was expressly forbidden to pay any of the debts of the said Thomas, and was directed “to pay over to the said Thomas, from time to time, such part of the income of the said trust estate (or the whole thereof, if required) as may be necessary for the comfortable and reasonable support of the said Thomas, and of his wife and children, should he have any; the same to be used by the said Thomas.” On the death of the said Thomas, the property was to be disposed of in such manner as he might by his last will and testament direct; if he died intestate, leaving a wife or child, the property was to be delivered over to them; and if he left neither wife nor child, it was to return to the testator’s estate, and be distributed as though no such bequest had over been made. The said Thomas was unmarried at the time of the testator’s death, but subsequently married, and his wife was living when this bill was filed against him. J2cW,.that the bequest was intended as a prospective provision for the debtor’s wife and children as well as for himself, that his wife took a joint interest with him in such portion of • the income of the trust estate as might bo necessary for their comfortable and reasonable support, and that no portion of the income could be subjected in equity by his creditors.

Appeal from tbe Chancery Court of Snmter. Heard before tbe Hon. Wade Keyes. This bill was filed by Daniel McRae, tbe appellee, as a judgment creditor of Thomas M. Hill, tbe principal defendant. Tbe allegations, in substance, were as follows : That complainant recovered a judgment against said Hill on tbe 9th April, 1851, on which an execution was duly issued, and returned “ no property found” ; that said defendant has no property, within complainant’s knowledge, on which an execution at law can be levied, but he has an equitable interest in certain property, real and personal, which was bequeathed by bis father as hereinafter more particularly stated; that since the death of said testator, said defendant has married, and his wife is now living', but they have no children ; that the trustee appointed by said testator in his will declined to accept the trust, and thereupon, on said defendant’s application, another trustee was appointed by the Chancery Court, into whose possession the trust estate has come. i The will referred to in the bill was executed in October,. 1848, and was admitted to probate on the 5th November, 1850. The bequest in favor of said Thomas M. Hill was in these words: “ I give, devise, and bequeath the share which may be set off to my son Thomas M. Hill, to my son-in-law William B. Lott, in trust for the use and benefit of my said son Thomas : the same to be held, used, and managed by him, the said William B. Lott. And I do hereby empower- the said William B. Lott, if in his discretion he shall deem it advisable, and for the interest of the said Thomas, and that the said trust estate would be benefited or increased thereby, and the said Thomas shall assent and agree to the said disposition, to sell the said negroes, and to re-invest the proceeds in other property, or in stocks which may be considered good and promise to pay fair dividends, or in lands, and, if desirable, in other States than the State of Alabama; and I do direct, that the said William B. Lott do, from time to time, pay over to the said Thomas such part of the income of the said trust estate (or the whole thereof, if required) as may bo necessary for the comfortable and reasonable support of the said Thomas, and of his wife and children, should he have any, — the same to be used by the said Thomas; and the said William B. Lott is expressly forbidden to pay any of the debts of the said Thomas M. Hill. And should the said Thomas M. Hill die, having made a will and testament in due form to be admitted to probate, I do direct that the said trust estate shall be handed over and disposed of in such manner as the said Thomas shall by his said will have directed ; should he die leaving a family, either a wife and children or either, that then the said trust shall also cease and determine, and the said estate be delivered over to such wife or children, or their guardian, and the said William B. Lott be discharged ; should he die leaving neither wife nor children, I do direct that said estate shall then return into my estate, and be distributed among my other children, or their representatives, precisely as though it had not been given for the use of my said son.” The said Thomas M. Hill, his wife, and their trustee, were made defendants to the bill; and the prayer was, that a decree might be made “ subjecting the proceeds of said trust estate to the satisfaction of complainant’s judgment,” and for general relief. The defendants demurred to the bill for the want of equity, and, on their demurrer being overruled, declined to answer. A decree pro confesso for want of an answer was then entered against them, and a decree final subjecting the income of the trust estate to the satisfaction of complainant’s judgment; and a reference to the master was 'Ordered. The overruling of the demurrer to the bill, and the final decree rendered, are now assigned for error. It is insisted on the part of the appellants, first, that Thomas M. Hill has no interest in the bequest for his benefit which can be subjected to the payment of his debts; and, secondly, that if he has any such interest, it is only that portion of the income which would be necessary for his own comfortable and reasonable support, and not that portion which would be necessary for the support of himself and his wife. 1. This case is unlike Hugely & Harrison v. Eobinson, 10 Ala. 702, where the bequest was, that'all the rents, profits, and hires should be held for the use and benefit of the son and his family. Here, the bequest is to a trustee, who is required to use, hold, and manage the property, and from time to time to pay over to the son such part of the income as may be necessary for the comfortable and reasonable support of the son, his wife, and children. The son having no right under the bequest, except to a comfortable and reasonable support for himself and his wife, his interest is inseparable from hers, and consequently, according to the principles settled in the case of Rugely & Harrison v. Eobinson, cannot be subjected to the payment of his debts. — See opinions of Ormond and G-oldth-waite, JJ., pp. 738, 742-3. The following cases are also expressly in point: G-odden v. Orowhurst, 10 Sim. 642; Twopenny v. Peyton, 10 ib. 487; Wetlierell v. Wilson, 1 Keen, 81; Kearsley v. Woodcock, 3 Hare, 185. This case differs not only from Hugely & Harrison y. Robinson, but from all the other cases on the subject in which the trustees were directed to apply the whole income. Here, he is only to pay over such part of the income as may be necessary for the comfortable and reasonable support of the son and his wife. The amount necessary for this purpose rests in the discretion of the trustee, and is fluctuating : the amount necessary at one'time might be wholly insufficient at another; sickness in the family, and increase in the cost of the means of living, would require a larger amount of the income atone time than at another ; and a largo portion might be requisite for the rent or purchase of a house to live in, and for obtaining necessary furniture, &c. How then is it possible to sepa* rate the’interest of the son from that of his wife? If this cannot be done, then, according to the case of Hugely & Harrison v. Robinson, Thomas M. Hill has no interest which can be subjected to the payment of his debts. If, however, under the influence of Hugely & Harrison y. Robinson, Hill has such an interest as may be subjected by his creditors, then it is insisted for the appellants, with due deference, that that case is not law; and this is the more readily done, since this court, in 19 Ala. 411, has given an intimation that it is not satisfied with that decision. In support of the position that that case is incorrect, the court is referred to the argument of the counsel in the case, and in 19 Ala. 404, and to the opinion of C. J. Collier, in 10 Ala. 716. No American case which sustains that decision has been found; but there are several in direct conflict with it, to which the attention of the court is respectfully asked. They are, 3 G-ratt. 335; 4.Leigh, 550; 1 ib. 443; 5 Munf. 86; 5 Watts & S. 323; 15 N. H. 314 ; 10 Mete. 188 ; 7 Watts, 551. In this case, the bequest is not only merely for the support of the testator’s son and his wife, but the trustee is expressly forbidden to pay any of his son’s debts. Can the court compel him to do what the testator says he shall not do ? What principle of public policy requires that the support of the son shall be taken to pay Ms debts, contrary to the express words of the bequest ? We have no bankrupt or insolvent laws, on which it can be said that such a bequest is a fraud; and if we had, it might as well be said, that if the testator, instead of making a bequest to his son, had disinherited him because he was in debt, that would be a fraud which would enable his creditors to charge the estate for the share to which the son would have been entitled if he had not been disinherited. 2. But, if Thomas M. Hill has such an interest as can be separated from that of his wife, it is very clear that only so much of the income can be subjected as may be necessary for Ms support, and that a proper allowance should be made to the wife ; and consequently, the decree of the chancellor, which subjected the whole income, is erroneous. — Rugely & Harrison v. Robinson, supra; 3 Hare, 185 ; 2 Y. & Coll. 98 ; 3 Beav. 20; 2 ib. 62. The decree is erroneous, also, even supposing that all of the income necessary for the support of the husband and wife is liable to his debts ; for it subjects the whole income, while the trustee is only authorized to pay over such part as may be necessary for their support. Each clause of the will creating the bequest must be construed with refereiice to the others ; and, taken together, they clearly show that the property is bequeathed to the trustee, to be by him held, used, and managed so as to derive a revenue from it; of which revenue a sufficient portion is to be paid over to the beneficiary for the support of himself, his wife, and children. The fact that the amount thus to be paid over is to be used by the son, makes no difference: the trust for the wife and children is nevertheless complete. — Weth-erell v. Wilson, 1 Keen, 80, (15 Eng. Oh. R. 81.) It is a well established legal proposition, that all of a man’s property, or interest in property, whether legal or equitable, is subject to the payment of his debts, if it can be reached and subjected without disturbing the virtual rights of. others in the same property. Public policy inhibits the existence of a different rule ; and, indeed, this rule is not contradicted by the appellants’ counsel. What interest, then, does Thomas M. Hill take in the property bequeathed by his father ? In the first part of the bequest, the testator uses this language, “I give, devise, and bequeath the share which may be set off to my son Thomas M. Hill, to my son-in-law William B. Lott in trust for the use and benefit of my said son Thomas, — the same to be held, used, and managed by him, the said William B. Lott.” Now it is clear, if the will had stopped here, that it would vest the legal title to the property conveyed in William B. Lott as a naked trustee, and the whole use, or valuable interest in the property, in Thomas M. Hill. It is equally clear that he takes that interest separately, and not jointly with any other person ; and that he takes this use without any limitation or restraint upon his right to alienate the same. The corpus of the property is only to be held by the trustee, subject to the trust declared by the will. It is clear, then, that this use, which is valuable property, and which, holding it separately and not jointly with another, he has' the power to sell and dispose of, is liable to the payment of his debts ; and we look in vain to the subsequent parts of the will for anything which changes the uso first declared, or which invests any one else with a joint interest in that use. The only clause of the will which can be supposed to have any such effect, is to be found in these words — “And I do direct that the said Wm. B. Lott do, from time to time, pay over to the said Thomas such part of the income of the said trust estate (or the whole thereof, if required) as may be necessary for the comfortable and reasonable support of the said Thomas, and of his wife and children, should he have any, — the same to be used by the said Thomas.” In this clause, the corpus of the property bequeathed is recognized as the trust estate, and there is no new declaration of the use of the property for the maintenance of the wife and child of the said Thomas ; but, on the contrary, the testator expressly provides, that the income, or so much as may be necessary for the reasonable support of the said Thomas, and of his wife and children, should he have any, shall be paid over to the said Thomas — not for the use of the child, but “ to be used by the said Thomas.” Now, as the said Thomas has the unrestricted right to use the sum paid over to him under this provision of the will, he certainly could sell, or dispose of it as he thinks proper. There is no declaration that he should use the sum thus paid over to him by the trustee for the support of Ms wife and children; - nor is any trust declared in their favor, and therefore nothing limiting his right to sell and dispose of the same as he may think proper; nor is there any disposition over to a third person, of the remainder of the proceeds and profits of the trust property not paid over'to the said Thomas. It follows, therefore, as the whole use of the trust property is given to said Thomas by the first clause of the bequest, and as there is no subsequent declaration of trust in favor of any other person, nor any limitation of any part of the use or profits of the trust property, that they must be subject to the payment of his debts. But if this view should be incorrect, certainly Thomas M. Hill takes a joint interest with his wife ; and as this use does not consist of a house, furniture, household servants, nor any other thing incapable of severance, the court should order an account to be taken of his interest in the use of the trust property, and subject that to. the payment of his debts. — Hugely & Harrison v. Robinson, 10 Ala. 702.