Garretson v. Garretson

• Decision Date: 16 June 1967
• Citation: 306 A.2d 737
• Parties: Peter J. GARRETSON and Bank of Delaware, a corporation of the State of Delaware, as Trustee under a certain revocable living trust agreement executed
• Court: United States State Supreme Court of Delaware

Page 737

306 A.2d 737

Peter J. GARRETSON and Bank of Delaware, a corporation of

the State of Delaware, as Trustee under a certain revocable

living trust agreement executed June 16, 1967, with

Cornelius D. Garretson, as Settlor, Defendants Below, Appellants, v. Jessie B. GARRETSON, Plaintiff Below, Appellee.

Supreme Court of Delaware.

May 23, 1973.

William H. Uffelman, Jr., of Theisen & Lank, Wilmington, for appellant Peter J. Garretson.

Charles F. Richards, Jr. and Allen M. Terrell, Jr., of Richards, Layton & Finger, Wilmington, for appellant Bank of Delaware.

Richard E. Poole, of Potter, Anderson & Corroon and Joseph Donald Craven, Wilmington, for appellee Jessie B. Garretson.

James M. Tunnell, Jr., Andrew B. Kirkpatrick, Jr., Paul P. Welsh and William H. Sudell, Jr., of Morris, Nichols, Arsht & Tunnell, Wilmington, for Wilmington Trust Company, Amicus Curiae.

WOLCOTT, C.J., and CAREY and HERMANN, JJ., sitting.

WOLCOTT, Chief Justice:

These are appeals taken by the husband, defendant below, and Bank of Delaware, Trustee under a testamentary trust for the benefit of the husband, from orders of the Chancellor denying the Bank's motion to dismiss the wife's complaint and the husband's motion to vacate an order of sequestration, and granting counsel fees to the wife payable out of the trust funds. See Opinion below Wife v. Husband, Del.Ch., at 286 A.2d 256. Both the Bank of Delaware and the husband urge substantially the same grounds for their motions. Wilmington Trust Company, appearing as Amicus Curiae, filed a brief in support of the two defendants' appeals.

The individual parties were married in 1943 and lived together until December 19, 1967, when the husband left the wife. In 1968, while the husband was still a resident of Delaware, the wife commenced a separate maintenance action in the Court of Chancery. Ultimately, the parties negotiated a settlement which was cast in the form of a separation agreement and incorporated by the Vice Chancellor in a final order of September 9, 1969. Under the terms of the settlement, the husband was required to pay the wife $400 a month. Shortly thereafter, the husband left Delaware and established a residence in the State of Florida, and obtained a divorce in the Republic of Mexico dated October 23, 1969.

Prior to these events, in September of 1968, the husband brought an action for divorce against the wife in Delaware on the ground of incompatibility. Ultimately, a decree nisi was denied. Then followed the separate maintenance action and the final order incorporating the separation agreement.

The husband has paid nothing to the wife since May, 1970. As a result, the wife brought a second action in the Court of Chancery, now before us, seeking a judgment against the husband for the amount of the arrearages and an order upon the Bank of Delaware, Trustee, to pay into Court the amount of any such judgment, and to make payments thereafter directly to her in compliance with the order entered in the separate maintenance action.

The amended complaint alleges that the husband is a resident of Florida, and is the beneficiary of a testamentary trust of which Bank of Delaware is Trustee, and from which he receives annual payments of about $18,000.

Jurisdiction over the Bank of Delaware was acquired by personal service. In order to obtain jurisdiction over the husband, now a resident of the State of Florida, the plaintiff obtained a sequestraion order under which the income from the testamentary trust, payable to the husband, was seized in order to coerce his appearance in the Court of Chancery.

Bank of Delaware, Trustee, appeared and moved to dismiss the complaint, and the husband appeared specially, moving to vacate the order of sequestration. The husband has never been served personally with process of the Court of Chancery, nor has he appeared generally submitting himself to its jurisdiction.

The basic questions before us for decision are the validity of the sequestration of the income of the beneficial interest held by the husband in the testamentary trust, and the Chancellor's order allowing interim attorneys' fees and expenses to the wife's counsel out of the trust income.

Initially, we note that the husband and Bank of Delaware, Trustee, sought to bring into the case the marital status of the wife and the husband. Specifically, a certified copy of a divorce decree, issued in the Republic of Mexico, was offered and accepted in evidence without objection on the part of the wife's counsel. This purports to show that the husband and wife were divorced by the Court of the Republic of Mexico after the entry of the final order in the separate maintenance action. The Chancellor refused to consider this as before him under the present motions. We agree with the Chancellor for the reasons stated in the Opinion below.

We therefore consider that, for the purposes of the appeals before us, the record discloses solely that the individual parties are still husband and wife. Whether or not this status will remain after a final hearing is beside the point. We may not, on these appeals, consider any matters appearing outside of the complaint, the sequestration order, and the motions addressed thereto.

The motion of the husband to vacate the sequestration order, and the motion of the Bank of Delaware, Trustee, to dismiss the complaint, are based fundamentally upon the proposition that the trust in question is a spendthrift trust, and under the terms of the trust instrument--that is, the will--the wife may not seek redress by the seizure of trust assets.

10 Del.C. § 366(a) provides, in part, that if a defendant in an action pending in the Court of Chancery is a nonresident, the Chancellor may order such nonresident defendant to appear on a certain day and, if he does not appear, compel his appearance 'by the seizure of all or any part of his property, which property may be sold under the order of the Court to pay the demand of the plaintiff, * * *.' The two appellants argue that the property sought to be seized under the Chancellor's sequestration order is not the subject of seizure in order to compel appearance.

The argument is based upon ITEM II of the will creating the trust which provides as follows:

'The interest of a beneficiary in the trust property or in the income therefrom shall not be subject to the rights of the creditors of such beneficiary and shall be exempt from execution, attachment, distress for rent, and all other legal or equitable process instituted by or on behalf of such creditors, and the interest of such beneficiary in the trust property or in the income therefrom shall be unassignable.'

It is argued that the provisions of ITEM II of the will comply exactly with the provisions of 12 Del.C. § 3536 validating the inclusion of spendthrift trust provisions in a trust instrument. This section provides in part as follows:

'The creditors of a beneficiary of a trust shall have only such rights against such beneficiary's interest in the trust property or the income therefrom as shall not be denied to them by the terms of the instrument creating or defining the trust or by the laws of this State. . . . Every interest in trust property or the income therefrom which shall not be subject to the rights of the creditors of the beneficiary, as aforesaid, shall be exempt from execution, attachment, distress for rent, and all other legal or equitable process instituted by or on behalf of...