Brahmey v. Rollins

• Decision Date: 06 May 1935
• Parties: BRAHMEY v. ROLLINS et al.
• Court: New Hampshire Supreme Court

179 A. 186

BRAHMEY

v. ROLLINS et al.

Supreme Court of New Hampshire. Merrimack.

May 6, 1935.

[Ed. Note—For other definitions of "Unliquidated Claim," see Words & Phrases.]

[Copyrighted material omitted.]

Exceptions from Superior Court, Merrimack County; Page, Judge.

Creditor's bill by Edward T. Brahmey against Amylitta Gardner Rollins and another. Bill was dismissed, and the plaintiff excepted.

Case discharged.

Creditor's bill. The plaintiff, holding a judgment against Amylitta, seeks its payment from her interest in a fund held in trust by the other defendant. The trust was created by Amylitta's former husband as part of an agreement for alimony in his libel for divorce from her. Her interest is set forth in the trust instrument as follows: "Out of the net income of said trust to pay * * * five thousand dollars annually, payable monthly, to * * * [her during life], but upon condition only that said annuity shall not be assigned, alienated or pledged in any manner, or be subject to attachment or any indebtedness of [hers]. * * * If at any time the net income is insufficient to meet the requirements hereunder, then said trustee is authorized to use such part of the principal of said trust as may be necessary. * * *"

On hearing, the court dismissed the bill, and the plaintiff excepted. There were also exceptions to the admission and exclusion of evidence.

James A. Broderick, of Manchester, for plaintiff.

Demond, Woodworth, Sulloway, Piper & Jones and Jonathan Piper, all of Concord, for defendant debtor.

Benjamin W. Couch, of Concord, for defendant trustee.

ALLEN, Chief Justice.

As stated in the defendant's brief, the issue presented is whether the provisions of the trust instrument against alienation and seizure by creditors are valid when the trustee's duty to pay to the beneficiary is absolute. It is conceded that in the cases of spendthrift trusts hitherto decided here the trustee's obligation to pay is only discretionary. But it is contended that their thought and reasoning in sustaining a spendthrift character of the trusts therein considered show no difference in principle when the trustee's duty to pay is fixed and when it is dependent.

Whether the creditor has sought to have the trustee charged by trustee process or by a creditor's bill, the court has in no case committed itself to a recognition of the validity of a spendthrift trust to the extent now claimed.

The cases where trustee process has been held unavailable are readily explainable upon the rule that the trustee is not chargeable while the claim against him is unliquidated or undetermined in amount. Gove v. Varrell, 58 N. H. 78; Bucklin v. Powell, 60 N. H. 119; Eastman v. Thayer, 60 N. H. 575. When the trustee is to pay the beneficiary in discretion, he is not required to use his discretion either before or at the time of giving his disclosure in the creditor's behalf. The duty to act is owed only to those equitably interested in the trust. The disclosure may show some part of the income undoubtedly due the beneficiary, but it cannot be told definitely how much. The trustee may not even disclose an amount which must at least be owing. When "the exercise of judgment, discretion, and opinion, and not mere calculation or computation" is required to determine the amount of a claim, it is unliquidated. Eastman v. Thayer, supra, 60 N. H. 575, 576. Moreover, the staking of reasonable limits is a matter of judicial inquiry. Eaton v. Eaton, 82 N. H. 216, 219, 132 A. 10, and cases cited. Thus clearly the trustee owes nothing until he performs his duty of fixing the amount or he owes an undetermined amount. In either alternative creditors hold nothing by the trustee process.

The trustee process cases are also sustainable on the view that the beneficiary's rights are not "credits," as the word is used in the trustee process statute (Pub. Laws, c. 356, § 19), in the trustee's possession. The entire trust estate, both principal and income, belongs to the trustee. Abbott v. Abbott, 76 N. H. 225, 81 A. 699. The beneficiary's right is that the trustee shall perform a duty to decide how much he is entitled to and then pay it. "* * * What he gave his son was the right to require the trustee to use this fund for his benefit. * * *" Eaton v. Eaton, 81 N. H. 275, 276, 125 A. 433, 35 A. L. R. 1034. The right is not a credit making the trustee a debtor.

In none of these cases was there a provision of the trust instrument placing the equitable life interest beyond the reach of creditors, to be considered. There was simply the holding that the beneficiary's rights were not to be reached by trustee process. Either it was because the beneficiary had no credits in the trustee's possession or it was because if credits they were undetermined in amount.

The case of Chase v. Currier, 63 N. H. 90, it is asserted, adopts the spendthrift trust idea "to the fullest extent." This view of it is not thought to be correct. A left money to B "to be prudently used if needed by him for his support," any of the fund remaining at his death to go to others. The court held that a trust was created, with no trustee named, and that one should be appointed to hold the fund with discretion to determine B's needs. The fund belonged to the remaindermen named by A, subject to B's right of support from it. It is a typical discretionary case in which trustee process does not lie. Beyond this it does not go.

The case of Wolfman v. Webster, 77 N. H. 24, 86 A. 259, is no different in principle. The trustee had discretionary authority to pay income for the needs and comfort of the beneficiary. Regarding it as broad enough to include discretionary payment of some of the latter's debts, the court held that a proper exercise of the discretion in refusing to pay a debt due the plaintiff placed him beyond reach of the income by trustee process. The creditor thus stood no better than creditors in cases where the income may be used only for the beneficiary's support.

In both of these cases Banfield v. Wiggin, 58 N. H. 155, is cited as supporting authority. There it was ruled that a trustee vested with discretion "as to the time, amount, or manner of the payment to be made" cannot be charged in trustee process. Also, in that case in turn, a dictum in Palmer v. Noyes, 45 N. H. 174, was relied upon to the effect that trustees with discretionary powers in acting for the beneficiary's interest are not chargeable.

In Watson v. Kennard, 77 N. H. 23, 86 A. 257, decided at the same time as Wolfman v. Webster, supra, the test of discretion was distinctly applied. The life beneficiary had interests in both the income and the principal. Those in the principal were for him to be supported from it if the trustee deemed it necessary. The case turned on the question whether his right to the income was absolute or whether it was, like the principal, to be paid in the trustee's discretion.

The trustee process cases are therefore of no forceful pertinence in application to cases where the right to the income is uncontrolled by the trustee's discretion.

In Abbott v. Abbott, 76 N. H. 225, 81 A. 699, and Parker v. Carpenter, 77 N. H. 453, 92 A. 955, the beneficiary's rights were held not subject to seizure for the reason that they were of personal enjoyment within the trustee's discretion.

Eaton v. Eaton, 81 N. H. 275, 125 A. 433, 35 A. L. R. 1034 (Id., 82 N. H. 216, 132 A. 10), is a case similar to Chase v. Currier, supra. Property was bequeathed to certain persons subject to be used for the benefit of the testator's son as his needs required. The son's right of support gave neither him nor his creditors any rights or interests of title, either legal or equitable. The purpose of the testator to place the property "beyond the reach not only of his son but also of his son's creditors" was thereby achieved. But it was because no absolute rights were given the son. The case makes no advance beyond others in the extension of spendthrift trusts.

By way of dictum, in Flanders v. Parker, 80 N. H. 566, 569, 120 A. 558, the proposition that any restraint of voluntary or involuntary alienation of a legal or equitable estate of an absolute nature is void, was given approval. It at least indicates that none of the decisions in discretionary cases has a background of dissent from the proposition. That there has been any adjudicated consideration of the rule, may not fairly be maintained.

It is said, however, that no rational distinction exists between cases of discretion and those without it.

It is thought there is a wide difference between provision limited to support or specific personal use and the grant of an annuity usable for any purpose. The right to support is more closely allied with personal than with property rights. It is on a par with the right of personal occupancy, and is comparable with the right to receive service. It is a right to have something done for one's strictly personal benefit. It is not assignable and may not be seized. The annuity is a property right. It is assignable and may be seized. In the provision for support protection from distress is secured. In the grant of an annuity which may be neither assigned nor seized, immunity from debts to be paid therefrom is sought. The distinction is between avoidance and escape. When property is given for a defined purpose, its use otherwise is avoided. The fact that the deprivation of other use is a part of the scheme is not detrimental to the validity and integrity of the prescribed use. When property is given without restriction of use, an attempt to bar a consequence of ownership is to seek an avenue of escape The contrast is substantial both in principle and practical application.

In passing on the merits of provisions against the assignment or seizure of an equitable life estate as matters of new impression, the theory that equity may determine the incidents of estates of its own creation is the source of their support. The theory has...