John Eaton v. Boston Safe Deposit Trust Company

• Decision Date: 13 March 1916
• Docket Number: No. 466,466
• Citation: 36 S.Ct. 391,60 L.Ed. 723,240 U.S. 427
• Parties: JOHN E. EATON, Trustee in Bankruptcy of the Estate of Fannie Leighton Luke, Plff. in Err., v. BOSTON SAFE DEPOSIT & TRUST COMPANY, Trustee under the Will of John W. Leighton, Deceased, and Fannie Leighton Luke
• Court: U.S. Supreme Court

240 U.S. 427

36 S.Ct. 391

60 L.Ed. 723

JOHN E. EATON, Trustee in Bankruptcy of the Estate of Fannie Leighton Luke, Plff. in Err.,

v BOSTON SAFE DEPOSIT & TRUST COMPANY, Trustee under the Will of John W. Leighton, Deceased, and Fannie Leighton Luke.

No. 466.

Submitted February 28, 1916.

Decided March 13, 1916.

Mr. Gilbert E. Kemp for plaintiff in error.

Messrs. Raymond H. Oveson, Alexander Kendall, and Matthew Hale for defendants in error.

Mr. Justice Holmes delivered the opinion of the court:

This is a bill for instructions, brought by the Trust Company, the principal defendant in error, to ascertain whether a fund bequeathed to it in trust for Mrs. Luke codefendant in error, passed to her trustee in bankruptcy. The bequest was of $75,000, 'The whole of the net income thereof to be paid my adopted daughter, Fannie Leighton Luke, wife of Otis H. Luke, of said Brookline, during her life quarterly in each and every year together with such portion of the principal of said trust fund as shall maks the amount to be paid her at least three thousand dollars a year during her life, said income to be free from the interference or control of her creditors.' It is established law in Massachusetts that such trusts are valid and effective against creditors (Broadway Nat. Bank v. Adams, 133 Mass. 170, 43 Am. Rep. 504), and subject to what we are about to say, against assignees in insolvency or trustees in bankruptcy (Billings v. Marsh, 153 Mass. 311, 10 L.R.A. 764, 25 Am. St. Rep. 635, 26 N. E. 1000; Munroe v. Dewey, 176 Mass. 184, 79 Am. St. Rep. 304, 57 N. E. 340). The trustee in bankruptcy seeks to avoid the effect of these decisions on the ground that Mrs. Luke's equitable life interest was held by the supreme court of the state to be assignable, and that therefore it passed under § 70 a (5) of the bankruptcy act, vesting in the trustee all property that the bankrupt 'could by any means have transferred.' [30 Stat. at L. 566, chap. 541, Comp. Stat. 1913, § 9654.] The supreme judicial court, however, held that the above-cited cases governed, and that the property did not pass. 220 Mass. 484, L.R.A. ——, ——, 108 N. E. 64.

If it be true without qualification that the banrupt could have assigned her interest and by so doing could have freed from the trust both the fund and any proceeds received by her, the argument would be very strong that the statute intended the fund to pass. There would be an analogy at least with the provision giving the trustee all powers that the bankrupt might have exercised for her own benefit, § 70 a (3), and there would be difficulty in admitting that a person could have property over which he could exercise all the powers of ownership except to make it liable for his debts. The conclusion that the fund was assignable was based on two cases, and we presume was meant to go no farther than their authority required. The first of these simply held that an executor was not...