In the Matter of the Estate of John B. Manley, Fletcher G. Manley, Claimant. Estate of C. G. Staples

• Decision Date: 03 February 1942
• Citation: 24 A.2d 357,112 Vt. 314
• Parties: IN THE MATTER OF THE ESTATE OF JOHN B. MANLEY, FLETCHER G. MANLEY, CLAIMANT. ESTATE OF C. G. STAPLES, APPELLANT
• Court: Vermont Supreme Court

24 A.2d 357

112 Vt. 314

IN THE MATTER OF THE ESTATE OF JOHN B. MANLEY, FLETCHER G. MANLEY, CLAIMANT. ESTATE OF C. G. STAPLES, APPELLANT

Supreme Court of Vermont

February 3, 1942

January Term, 1942.

Spendthrift Trust.-1. Appealable Interest, P. L. 3005.-2. Nuisance Value Not Appealable Interest, P. L. 3005.-3. Creation of Spendthrift Trust.-4. Duties of Testamentary Trustee, P. L 3041, 3023, IV.-5. Assume Trustee's Bond Filed.-6. Length of Spendthrift Trust.-7. Probate Court's Powers Under Spendthrift Trust.-8. Validity of Spendthrift Trust.-9. Completion of Trust.-10. Assignee's Rights Under Spendthrift Trust.-11. Assignee of Spendthrift Trust No Power to Appeal, P. L. 3005.

1. The interest required to support an appeal from a decree or order of the probate court under P. L. 3005 must be a legal interest which may, by such order or decree, be either enlarged or diminished.

2. The power of a person to cause delay and difficulty to another when the latter seeks to obtain property which he claims is not, in itself, in the circumstances of this case, an interest sufficient to support an appeal under P. L. 3005.

3. A testamentary provision that neither the principal nor the income of a share of any child shall be liable for any of such child's debts owing or that may be thereafter contracted, that a child shall not anticipate his principal or interest of his share nor assign, transfer or hypothecate the same, and with directions to a trustee not to recognize accept or honor an order, transfer or assignment of any part of the income or principal creates a spendthrift trust in which both the trustee and the beneficiary are bound by the prohibition against alienation.

4. The duties which a testamentary trustee must perform in the management of a trust estate are prescribed by P. L. 3041 to be those specified in the required bond, among them being to pay over and deliver the effects remaining to the persons entitled to the same according to law and the will of the testator, P. L. 3023, IV.

5. In the absence of a finding to the contrary, it will be assumed that the statutory bond was filed by a testamentary trustee.

6. A prohibition in a testamentary spendthrift trust against the recognition of an assignment continues, under the circumstances of the case at bar, until the trustee has delivered the fund involved to the beneficiary as directed in the will.

7. A probate court being a court of limited and special jurisdiction having only the authority prescribed by statute could not, under the circumstances of the case at bar, order payment of proceeds of a spendthrift trust to an assignee when the testamentary trust prohibited alienation or transfer of the funds and directed payment to the beneficiary.

8. A testator has the right to direct that property shall go to a beneficiary to the exclusion of the latter's alienees and creditors.

9. When the purposes of a trust have been fulfilled and nothing remains for the trustee to do but to pay over the fund to the beneficiary and he neglects to do so the beneficiary may maintain an action at law against him for the recovery of the trust estate.

10. But a trustee's legal duty to pay over funds at the termination of the trust can not be invoked to compel a trustee of a spendthrift trust to deliver the corpus or any part of it to an assignee in opposition to the terms of the will creating the trust.

11. An assignee of the beneficiary of a spendthrift trust which prohibits alienation has not sufficient interest to maintain an appeal pursuant to P. L. 3005.

PROBATE APPEAL. Probate Court for the District of Marlboro adjudged that claimant was entitled to part of the corpus of spendthrift trust of which he a beneficiary. Staples' estate claiming an assignment from the beneficiary appealed. At April Term, 1941, Windham County Court, Adams, J presiding, granted claimant's motion to dismiss. Appellant took exceptions. Other facts are stated in the opinion. Affirmed.

Judgment affirmed.

Barber & Barber and Harold E. Staples, Administrator, pro se, for appellant.

Gibson & Gibson (A. Luke J. Crispe on brief) for claimant

Present: MOULTON, C. J., SHERBURNE, BUTTLES, STURTEVANT and JEFFORDS, JJ.

OPINION

MOULTON

The only issue here is whether the appellant, Harold E. Staples, as administrator of the estate of Charles G. Staples, deceased, is a person interested in a decree of distribution made by the Probate Court for the District of Marlboro in the Estate of John B. Manley, deceased, and as such entitled to an appeal therefrom under the provisions of P. L. 3005. On the motion of the claimant Fletcher G. Manley, son of John B. Manley, the County Court dismissed the appeal, and the cause is here upon the appellant's exception to this ruling.

These are the undisputed facts: John B. Manley died testate, and his will was duly admitted to probate. By the seventh paragraph thereof a certain part of the estate was given to the Brattleboro Trust Company in trust, the income to be paid to the testator's sons, until they should, respectively, reach the age of twenty-five years, and it was provided that "When my said sons respectively reach the age of twenty-five years, if they respectively, are then in good financial standing and not in debt, then I give and bequeath to such as meet such condition, one-half of his said share above named, and other one-half of each said share is to be held in trust, as aforesaid until my said sons, respectively, arrive at the age of thirty years; and during that time, the use, interest and income from each share to be paid, as fast as it is received by my said trustee, to each son entitled thereto as aforesaid. * * * But if any of my sons is not in good financial standing and is not free from debt when he arrives at the age of twenty-five years; then the whole of his share is to remain in trust and the income therefrom to be paid to him as aforesaid, until such time as he is in good financial standing and free from debt, when said one-half of said share shall be paid to him. * * *" There are also provisions, not material here, as to the other one-half, which was to be paid under similar conditions to each son when he became thirty years of age.

The eleventh paragraph of the will is as follows: "It is my desire that my children shall derive benefit from my estate, and that they shall be thrifty, industrious and saving, and it is therefore my will that neither the principal nor the income of a share of any of my said children shall be liable for any debts owing by him or her, nor for any debts that may be hereafter contracted by him or her, and that none of my said children shall anticipate his or her principal or interest, of his or her share, nor shall assign, transfer or hypothecate the same, and it is my will that my said trustee shall not recognize, accept or honor, any order, transfer or assignment of any part of the income or principal, of the share of any of my said children in my estate."

In spite of the foregoing prohibition against assignment or hypothecation the claimant on October 19, 1935, executed and delivered to Charles G. Staples, an instrument, the material parts of which are: "I * * * do hereby sell, assign, transfer and convey to said Charles G. Staples, all my right, title and interest in and unto such portion of the principal of the estate of my father, John B. Manley, as may be necessary to pay and discharge any indebtedness now due and owing from me to said Charles G. Staples, and for any and all indebtedness hereafter accruing. * * * This assignment is made for the purpose of securing said Charles G. Staples for such loans as he may make to me from time to time, and the principal of my share in my father's estate is hereby intended to be pledged as collateral security for the repayment of said loans to said Charles G. Staples."

It may be inferred that the claimant did not fulfill his father's desire that he should be thrifty, industrious and saving. In November, 1939, he filed a petition in bankruptcy,...