Ghormley v. Smith

• Decision Date: 02 February 1891
• Docket Number: 346
• Citation: 139 Pa. 584,21 A. 135
• Parties: WILLIAM GHORMLEY v. E. A. SMITH ET AL
• Court: Pennsylvania Supreme Court

21 A. 135

139 Pa. 584

WILLIAM GHORMLEY v. E. A. SMITH ET AL

No. 346

Supreme Court of Pennsylvania

February 2, 1891

Argued January 7, 1891

APPEAL BY PHILA. TRUST CO. FROM THE COURT OF COMMON PLEAS NO. 4 OF PHILADELPHIA COUNTY.

No. 346 January Term 1890, Sup. Ct.; court below, No. 257 December Term 1889, C.P. No. 4.

On December 11, 1889, there was filed in the court below the record of a judgment for $346.17, recovered in the Court of Common Pleas No. 1 of Allegheny county by William Ghormley against Edward A. Smith and Henrietta C. Smith, his wife, and on the same day a writ of execution-attachment was issued thereon, and afterwards served upon the Philadelphia Trust Safe Deposit & Insurance Company, as garnishee of Henrietta C. Smith.

The garnishee, in response to a rule to answer certain interrogatories, filed an answer setting forth that the respondent was trustee for Mrs. Smith, under a deed executed by her before her marriage, her name being then Henrietta T Catherwood. A copy of the deed was annexed to the answer. It bore date July 23, 1879. By said deed, Henrietta T Catherwood conveyed to the Philadelphia Trust, Safe Deposit & Insurance Company, all her property, real and personal, upon trusts in substance as follows:

To collect the income and pay over the same when and as received and not by anticipation, after deducting all taxes, necessary repairs, and all reasonable expenses of the execution of the trust, into the hands of the said Henrietta T. Catherwood, or to such person or persons as she should, by any writing under her hand, appoint and direct, for and during all the term of her natural life, whether she should remain sole or should marry, to and for her sole separate use and benefit, "so that all and singular the trust-estate, rents and income thereof, and every part thereof, shall be absolutely free from and not subject or liable to the debts, control, or engagements of any husband she may have or marry, or to her own debts, control, or engagements," her receipt or the receipt of her appointee to be a good and valid discharge, etc.; the grantor reserving a power to limit and appoint the estate by will among her children upon her death, and in default of such appointment the property to be conveyed to the use of her children, and the issue of deceased children, absolutely, subject, however, to any provision which the grantor might make for the payment of income to a surviving husband; or, if the grantor should leave no issue, then reserving a general power of appointment, and in default of its exercise the property to be held in trust for her surviving husband during his life, and at his death, or at the grantor's death, should she leave no husband, then in trust for the person or persons who would be entitled to the same under the intestate laws, had the grantor died seised and possessed thereof.

The deed gave to the trustee large discretionary powers as to selling and conveying the trust property, changing investments, and as to the general management of the trust-estate, and reserved to the grantor, in case of her marriage, power to withdraw from the trust a sum not exceeding $5,000, for the purpose of furnishing a house for her residence; and it contained the following further provision:

"This deed, indenture and conveyance, to be absolutely irrevocable in any event whatever, the question of inserting a power of revocation having been carefully submitted to and considered by said party of the first part, and deliberately determined to be excluded."

The answer averred, further, that the deed to the respondent, as trustee, was made by Henrietta T. Catherwood immediately after he becoming of age, with the intention and design of thereby creating an irrevocable trust for the protection of the property of the said Henrietta T. Catherwood from the control of any future husband she might marry, and from her own control and from liability to the debts and engagements either of herself or of any future husband; that the reserved power to withdraw from the trust, in the event of her marriage, a sum not exceeding $5,000, for the purpose of furnishing a house for residence, was exercised by the grantor and said sum was paid to her by the trustee, $2,000 thereof being paid on September 10, 1879, and $3,000 on January 2, 1880; that the trustee, at the time of answering, held in trust, under said deed, personal property of the par value of $38,285.11, and a one third interest in certain ground rents paying an annual income of $1,163.08, and had in its hands, to the credit of Mrs. Smith, net income to the amount of $561.52; "that this deed of trust was a good and valid provision by Mrs. Smith for the benefit of herself and family, and being made, as it was, by a single woman, not in debt at the time, and not with a view to embarking in business or contracting debts, but with a view to protecting her estate in the event of future coverture, it sins against no policy of the law, but, on the contrary, its provisions for the protection of herself and family should be maintained like trusts commonly classed as spendthrift son's trusts."

The answer also admitted the holding of certain funds as an active trustee under the will of Ann Catherwood, deceased, the same having been bequeathed to be held in trust for her benefit during life, free from the control of the beneficiary, ^[*] etc.

A rule for judgment against the garnishee, on the answer filed, having been taken, the court in banc, after argument thereof, entered the following order:

February 15, 1890, judgment for the plaintiff, and it is considered and adjudged that the garnishees have in their hands the sum of $352.55 ^[*] belonging to the defendant and subject to this attachment.

Thereupon, the garnishee took this appeal, specifying that the court erred:

1. In making the order for judgment.

3. In not entering judgment for the garnishee upon its answer.

4. In not discharging the rule for judgment.

The judgment is affirmed.

Mr. R. L. Ashhurst (with him Mr. Rowland Evans), for the appellant:

1. The garnishee having admitted the possession of income, held under the trust created by Mrs. Smith, to an amount greater than the plaintiff's judgment, no recourse was attempted to be had against either the corpus of that trust-estate, or the moneys coming from the trust under the will of Mrs. Catherwood, and the sole question now presented is the liability to attachment of the income of the property conveyed to the garnishee by Mrs. Smith before her marriage. The decision of the court below is not based upon any construction of the language of the trust deed, but, on the contrary, overrides and subverts its intention, and can be sustained only upon the ground that the trust is invalid, as in contravention of public policy or in violation of the statute 13 Eliz., c. 5. As has often been held, the statute of Elizabeth was really declaratory of the law, and therefore there is but one question presented, to wit: whether it is contrary to the policy of the law that a young girl, on attaining majority but without immediate contemplation of marriage, should be able to settle her patrimony so that the income shall not be subject to her husband's control, or her own anticipation, or to his or her debts.

2. It will be most unfortunate, in many respects, if such settlements be declared invalid. Experience has shown their necessity, to preserve for the wife and her children the income of her estate in all vicissitudes of fortune, and that it is wise for young ladies to make such provisions, before contracting marriage engagements, when the consent of the future husband is not required. Although the law may be otherwise in England, it is well settled in Pennsylvania that such settlements may be made for the beneficiary, male or female, by a donor or devisor, and no other class of trusts is so favored by our courts: Fisher v. Taylor, 2 R. 35; Eberly's App., 110 Pa. 95; Phila. Trust Co. v. Guillou, 100 Pa. 258; Ashhurst's App., 77 Pa. 464; Thackara v. Mintzer, 100 Pa. 154; Barger's App., 100 Pa. 240; Patterson v. Caldwell, 124 Pa. 460; Peoples S. Bank v. Dening, 131 Pa. 241. It cannot be doubted that the young girl's father might have so settled her estate, and it probably would not seriously be disputed that, after betrothal, she and her intended husband might safely have so limited it by a marriage settlement. Why should she, if her father unfortunately died intestate, be precluded from making a settlement herself, in advance of any affair of the heart?

3. A theory has been advanced, and is sought to be supported by the English cases and Mackason's App., 42 Pa. 330, to the effect that "a man cannot so settle his estate, that he shall have the benefit of the income thereof during his life and the disposal thereof after his death, and yet so that it shall not be liable to his creditors." We contend that this doctrine, as thus broadly stated is not law in Pennsylvania. The English rule is even broader, and goes to the extent that a trust cannot be created by which the beneficiary shall enjoy the income during life, with a power of disposition after death, which shall keep the property beyond the reach of creditors: Brandon v. Robinson, 18 Ves. 429; Adams' Eq., *42; Bispham's Eq., § 62; Perry on Trusts, 555; and this certainly is not law with us, our books being full of spendthrift trusts carefully upheld and protected. The distinction between trusts created by ancestors, and those created by the man himself, for himself and his family, is without authority, either here or in England. Its only basis is certain obiter dicta in Mackason's App., supra. The rights of creditors, referred to by Mr. Justice SHARSWOOD, in Ashhurst's App., 77 Pa 464, which cannot be...