Jamison v. Mississippi Valley Trust Co.

• Decision Date: 23 December 1918
• Docket Number: No. 20794.,20794.
• Citation: 207 S.W. 788
• Parties: JAMISON et al (RHODES et al., Interveners v. MISSISSIPPI VALLEY TRUST CO. et al.
• Court: Missouri Supreme Court

207 S.W. 788

JAMISON et al (RHODES et al., Interveners v. MISSISSIPPI VALLEY TRUST CO. et al.

No. 20794.

Supreme Court of Missouri, Division No. 2.

December 23, 1918.

Appeal from St. Louis Circuit Court; Vital W. Garesche, Judge.

Bill by Dorsey A. Jamison and another against the Mississippi Valley Trust Company and others, in which Thomas E. Rhodes and others filed separate intervening petitions joining the plaintiffs In the proceeding and praying for the same relief. Decree in favor of plaintiffs and intervening petitioners, and the trust company appear. Affirmed.

B. H. Charles, of St. Louis, for appellant. Jamison & Thomas and Gordon 3. Sommers, all of St. Louis, for respondents Jamison and others.

WHITE, C.

Plaintiffs Jamison and Thomas brought this suit as judgment creditors of the defendant Bell to set aside a conveyance of certain property by Bell to the Mississippi Valley Trust Company, as trustee, and to subject such property to the payment of plaintiffs' judgment. Several other judgment creditors of Bell, respondents here, filed separate intervening petitions, joining the plaintiffs in the proceeding and praying for the same relief. The circuit court found the issues in favor of the plaintiffs and intervening petitioners, and entered a decree subjecting the property in the hands of the trustee to the payment of several judgments. From this decree the trust company appealed.

The instrument attacked was executed March 8, 1915. It conveyed all of Bell's right, title, and interest in the estate of Frederick C. Peper, deceased, which estate was then being administered in the probate court of the city of St. Louis. It invested the trustee and successors with the title in trust for certain purposes and subject to certain limitations, and among them:

"First. The said trust shall continue for and during the period of five years, commencing from the date of this instrument, for the sole and separate use of the party of the first part. In the event, during the trust, of the death of the party of the first part, the trust shall terminate and the trust estate, together with any accrued income on hand, shall go as the party of the first part may by last will direct, and then upon such terms and conditions and subject to such limitations as the party of the first part may limit. In event the party of the first part make and leave no direction by will as aforesaid, then upon his death the trust estate with any accrued income on hand shall go to the then heirs at law of the party of the first part under the laws of Missouri.

"Second. The trustee shall from time to time pay over to the party of the first part on his written order or receipt the net income of the trust estate."

Third and Fourth. The trustee was empowered to manage and control the property, invest and reinvest, and sell the real estate, and otherwise manage the fund in their discretion. "Fifth. The trustees are not to exceed the payments out of the trust estate to the beneficiary above authorized, in whatever form the estate may be, except in case of extremity of the beneficiaries, or if by misfortune or unavoidable accident the varue of the trust estate shall become greatly diminished and imperious necessity affecting the then beneficiary or the family of the beneficiary should, in the judgment of the trustees, render it proper to use additional amounts out of the trust estate. * * * As to what is such extremity or imperious necessity and what amount of the principal is necessary to be used, the trustees shall exercise their best discretion, and their decision shall be absolute and conclusive."

Sixth. The beneficiary was prohibited from anticipating payments to become due, and all transfers, assignments, pledges, and mortgages by him were declared to be void and of no effect, and neither the principal nor the income of the estate should be subject to any debt or liability of his.

The several plaintiffs and intervening petitioners held judgments against the defendant Bell, some of them for debts which accrued prior to the execution of the trust deed, and some for debts which were incurred subsequent to its execution. On all of them executions had been issued and returned nulla bona.

The defendants Christian P. Bell and Hazel W. Bell, his wife, filed a separate answer admitting the allegations of the petition as to the existence of the plaintiffs' judgments, the execution of a trust agreement, and alleging that at the time of its execution Christian P. Bell was suffering from physical sickness and in great distress of mind, was in fear of contracting serious illness which would disable him from attention to business, and that he did not execute the instrument with intention of defrauding his creditors; that the instrument had served the purpose for which it was executed; and that these defendants did not desire that the trust should longer continue in force and effect. This separate answer further alleged that Christian P. Bell, in November, 1915, assigned to his wife onehalf the income arising from the trust estate. It prayed that the trust be dissolved and terminated, and out of the corpus of the estate the plaintiffs be paid their debts and the remainder divided between the defendants Christian P. Bell and his wife.

The Mississippi Valley Trust Company filed a separate answer, in which it asserted the validity of the trust agreement, set out the amounts the trustee had received from the estate of Peper, and denied that the instrument was executed for the sole and separate use of Christian P. Bell, but that his heirs at law were contingent beneficiaries in the fund. The answer then denied all liability and prayed to have the bill dismissed.

Both real estate and personal property were included in the trust.

Evidence was offered by the plaintiffs to show that Christian P. Bell was capable of managing his own affairs. It was shown further that the trustee had received at the time of the trial from the estate of Frederick C. Peper something more than $10,000, had paid to Christian P. Bell and his wife, besides the income, out of the corpus of the property "on account of extreme necessity," the sum of $904.28, and that as to part of this sum, at least, the trustee made no investigation as to the extent of the necessity, but took the word of Bell and his wife for it.

1. No objection is made to the form of the decree, though it is apparently not in strict accord with the prayer of the petition, which seeks to set aside and annul the trust agreement for fraud as against the creditors. The only question to be determined is whether this trust agreement has any validity as against the attack made upon it by these judgment creditors.

Under section 2880, R. S. 1909, in the article relating to fraudulent conveyances, every deed of gift or conveyance of goods and chattels in trust to the use of the person so making such deed of gift or conveyance is declared to be null and void as against creditors existing and subsequent. While this statute mentions only personal property, the principle announced applies to real estate as well. 1 Moore on Fraudulent Conveyances, p. 417, § 2, p. 422, § 4; McIlvaine v. Smith et al., 42 Mo. 45, loc. cit. 58, 59, 97 Am. Dec. 295; Donovan v. Dunning, 69 Mo. 436, loc. cit. 441, 442.

It is true that the doctrine of spendthrift trust prevails in this state; but a spendthrift trust cannot be created by one who is sui juris, for his own benefit. The right of disposition permits any person to give property to another upon such conditions and restrictions as he pleases. The creditors of the beneficiary of a trust have no right to complain of a gift to the beneficiary which restricts the use in such manner that they cannot reach it. The creditors of the donor only are concerned. This is the foundation of the right to create a spendthrift trust. But it is different when the debtor himself attempts to create a trust in his own favor in his own property. He cannot settle property in that manner and provide conditions against its being subject to the payment of his own debts, even though he provides for a contingent remainder in third persons. Mackason's Appeal, 42 Pa. 330, loc. cit. 337-339, 82 Am. Dec. 517; Nolan v. Nolan, 218 Pa. 135, loc. cit. 140, 67 Atl. 52, 12 L. R. A. (N. S.) 369; Bank v. Watkins, 126 Tenn. 453, 150 S. W. 96; Sargent et al. v. Burdett, 96 Ga. 111, 22 S. E. 667; Ward v. Marie, 73 N. J. Eq. 510, loc. cit. 520, 68 Atl. 1084.

Besides the fact that Bell created the trust in his own favor, there are certain requisites for a spendthrift trust which it lacked. This court has defined what is necessary to create a spendthrift trust. Kessner v. Phillips, 189 Mo. loc. cit. 524, 88 S. W. 68, 107 Am. St. Rep. 368, 3 Ann. Cas. 1005. The cestui que trust, as said there among other things, "must take no estate whatever, have nothing to alienate, have no right to possession, have" no beneficial interest in the land but only a qualified right to support, and an equitable interest only in the income."

Appellant calls attention to the first clause of the trust agreement, where it provides that, in case of the death of the beneficiary leaving no will, the trust estate would go to his ...