Cronquist v. Utah State Agr. College

• Decision Date: 04 January 1949
• Docket Number: 7197
• Citation: 114 Utah 426,201 P.2d 280
• Court: Utah Supreme Court
• Parties: CRONQUIST et ux. v. UTAH STATE AGR. COLLEGE

201 P.2d 280

114 Utah 426

CRONQUIST et ux. v. UTAH STATE AGR. COLLEGE

No. 7197

Supreme Court of Utah

January 4, 1949

Appeal from District Court, First District, Cache County Marriner M. Morrison, Judge.

Action by Heber Cronquist, also known as Heber O. Cronquist and another, against Utah State Agricultural College, to have declared null and void a contract between the plaintiffs and defendant, and a quitclaim deed executed by plaintiffs to defendant, wherein the defendant filed a counterclaim for specific performance of the contract. Judgment for defendant on its counterclaim, and plaintiffs appeal.

Judgment affirmed.

L E. Nelson, of Logan, for appellants.

L Tom Perry, of Logan, Grover A. Giles, Atty. Gen., and S. D. Huffaker, Asst. Atty. Gen., for respondent.

Wolfe, Justice. Pratt, C. J., and Latimer and McDonough, JJ., concur. Wade, J., concurs with the result.

OPINION

Wolfe, Justice.

Appeal by the plaintiffs from a judgment for defendant in an action by plaintiffs to have declared null and void a certain contract made between plaintiffs and defendant, and a quitclaim deed to certain land executed by plaintiffs to defendant. The court also granted judgment to defendant on its counterclaim for specific performance of the aforementioned contract.

Plaintiffs are husband and wife. The land involved in this controversy will be referred to as the College farm. The facts are substantially without dispute, and insofar as material here are as follows:

Olif Cronquist, father of the plaintiff Heber Cronquist, died testate on April 27, 1927, leaving a substantial estate of real and personal property of a total value of about $ 125,000. The greater part of the estate was left to the three surviving children of the testator, one of whom was plaintiff, Heber Cronquist. By the terms of the will and the decree of distribution, each child received about $ 30,000 worth of property immediately upon entry of the decree of distribution. The balance of the estate, including the College farm, was by the terms of the will left to the Cache Valley Banking Company as trustee, to hold in trust for twenty years. The decree of distribution in regard to the trust estate, followed the exact words of the will, as follows:

"'To Cache Valley Banking Company, a corporation, in trust, the following described property [Then follows description of the property so distributed in trust.]

"'Said lands and water stock to be held by said Cache Valley Banking Company, in trust, for twenty years, said Banking Company to have power to rent said premises and operate the same and pay one-third of rents, issues, profits, after deducting all necessary and proper expenses, to each of the three children of said decedent, namely, Heber Cronquist, Elam Cronquist and Margaret Hoffman, or to the heirs of law of each of them, per stirpes and not per capita, and at the expiration of said twenty years the said Cache Valley Banking Company to convey said premises and water stock to the three children of said decedent above mentioned, share and share alike, or to the heirs at law, per stirpes and not per capita.'"

At the time of the testator's death, the College farm was under lease to defendant, and it appears that the officers of the defendant were aware of the trust arrangements.

On November 9, 1944, before the termination of the trust estate, plaintiffs and defendant entered into an agreement whereby plaintiffs agreed to sell to defendant plaintiffs' undivided one-third interest in the College farm, for $ 10,000, and at the same time plaintiffs executed a quitclaim deed to the land, which deed was deposited with L. W. Hovey, trust officer of the trustee banking company, for delivery to defendant upon approval of the agreement by defendant's Board of Trustees. The quitclaim deed was later delivered to defendant, and was filed for record on November 20, 1944.

The trustee continued to hold the land in trust, and to administer it in accordance with the provisions of the trust instrument until July 19, 1947, on which date, by decree of the district court, the trust was terminated and the trust assets conveyed to the beneficiaries.

Plaintiffs commenced this action to have their contract with, and deed to defendant declared null and void. Defendant counterclaimed (by a pleading erroneously denominated a cross-complaint), praying for specific performance of the contract and that title to an undivided one-third of the lands in question be quieted in it. By its decree, the lower court denied to plaintiffs the relief prayed for, and granted to defendant the relief prayed for by it.

Plaintiffs have, by their assignments of error, attacked numerous rulings of the court, especially the findings of fact, conclusions of law, and the decree. However, there is only one substantial question involved, and that is whether the testamentary trust created by the will of Olif Cronquist was what is known as a spendthrift trust. Plaintiffs urgently contend that the trust was a spendthrift trust, that therefore plaintiff could not anticipate his interest therein, nor could he alienea it in the fashion attempted to be done here. Defendant insists that the trust was not a spendthrift trust, and that the contract and deed executed by plaintiffs are in all respects binding.

The question here involved is a matter of first impression in this court. No prior decisions of this court have dealt with the problem of spendthrift trusts, and there are no statutes in this state either to control or to guide our decision. Griswald on Spendthrift Trusts 270, Sec. 225. Not only are there no precedents as to what is necessary to create a spendthrift trust, or what the effect of a spendthrift trust shall be; it is still an open question in this state as to whether a spendthrift trust is valid at all. However, the questions here presented are not novel to American jurisprudence, and the courts of our sister jurisdictions have rendered numerous decisions treating the general questions here involved. Moreover, there is an abundance of text material by competent authors treating of the same general subjects. We turn to these authorities for assistance in determining the case at bar. We note here that counsel for both sides have been extraordinarily diligent in research and citing to us helpful discussions from the literature of the law.

We shall treat first the question of whether a spendthrift trust was created, or intended to be created, by the testator; and for purposes of this discussion we shall assume the validity of spendthrift trusts in this state.

The term "spendthrift trust" is not a felicitous one, and its use has been criticized by both courts and text writers. Although the term is not descriptively accurate, since it is well settled that the beneficiary need not be a spendthrift, nor an incompetent, but may indeed be a very astute business man, it has come to have a well-recognized meaning in Anglo-American jurisprudence. In general, a spendthrift trust is one in which the beneficiary is prohibited from anticipating or assigning his interest in or income from the trust estate. A definition frequently quoted in the older cases, is the one contained in 26 American and English Ency. of Law, 2d Ed., 138 which is as follows:

"'Spendthrift Trust' is the term commonly applied to those trusts that are created with a view of providing a fund for the maintenance of another, and at the same time securing it against his own improvidence or incapacity for self protection. The provisions against alienation of the trust fund by the voluntary act of the beneficiary, or in invitum by his creditors, are the usual incidents of such trusts."

For other definitions see 1 Bogert on Trusts and Trustees, pp. 597-598, Sec. 207, and pp. 715-718, Sec. 222; 65 C. J. 230, Trusts, Sec. 20; and 54 Am. Jur. 123, Trusts, Sec. 148,

No particular language need be employed by the settlor in creating a spendthrift trust. All that is necessary is that his intent to create such a trust be clearly shown. It is not necessary that the trust be denominated a spendthrift trust, or that specific restraints on alienation and anticipation be expressed, so long as the settlor's intent is manifest. As to this proposition there is little dispute between the parties. Defendant concedes the rule. See 54 Am. Jur. 124, Trusts, Sec. 150; Jones v. Harrison, 8 Cir., 7 F.2d 461; Mohler v. Wesner, 382 Ill. 225, 47 N.E.2d 64; 1 Underhill on the Law of Wills 695, Sec. 529; and Nunn v. Titche-Goettinger Co., Tex. Com. App. 245 S.W. 421. The serious question is as to whether the language employed by the testator in this case indicates with sufficient clarity and intent to create a spendthrift trust.

Plaintiffs have cited to us a number of cases involving facts somewhat similar to those in the case at bar, where it has been held that a spendthrift trust was created. Seymour v. McAvoy, 121 Cal. 438, 53 P. 946 41 L. R. A. 544; Fletcher v. Los Angeles Trust & Sav. Bank, 182 Cal. 177, 187 P. 425; In re De Lano's Estate, 62 Cal.App.2d 808, 145 P. 2d 672; Everitt v. Haskins, 102 Kan. 546, 171 P. 632; Meek v. Briggs, 87 Iowa 610, 54 N.W. 456, 43 Am. St. Rep. 410; Bennett v. Bennett, 217 Ill. 434, 75 N.E. 339, 4 L. R. A., N. S., 470; Wagner v. Wagner, 244 Ill. 101, 91 N.E. 66, 18 Ann. Cas. 490; Wallace v. Foxwell, 250 Ill. 616, 95 N.E. 985, 50 L. R. A., N. S., 632; In re Stambaugh's Estate, 135 Pa. 585, 19 A. 1058; Town of Shrewsbury v. Bucklin, 105 Vt. 188, 163 A. 626, 86 A. L. R....