Keaton v. Stephenson

• Decision Date: 12 February 1952
• Docket Number: No. 34258,34258
• Parties: , 1952 OK 51 KEATON v. STEPHENSON et al.
• Court: Oklahoma Supreme Court

Page 1088

240 P.2d 1088

206 Okla. 32, 1952 OK 51

KEATON v. STEPHENSON et al.

No. 34258.

Supreme Court of Oklahoma.

Feb. 12, 1952.

Syllabus by the Court.

1. The employment of an attorney on a contingent fee basis by the beneficiary of a spendthrift trust for the purpose of investigation and litigation over such trust funds is ineffective as an assignment of any interest in such fund or income therefrom.

2. Where services by way of consultation and advice in regard to a spendthrift trust have been rendered to the beneficiary by attorneys and a cash fee commensurate with the service rendered has been paid as a retainer the trust fund income is not liable for any further fee either by express contract or on a quantum meruit basis.

F. Leonard Sibel and Hal D. Leaming, Oklahoma City, for plaintiff in error.

Whitten & Whitten, Oklahoma City, for defendants in error.

BINGAMAN, Justice.

The plaintiff in error, Clarence J. Keaton, beneficiary of a trust fund set up under the will of J. R. Keaton, deceased, appeals from the judgment sustaining a writ of garnishment against his interest in such fund.

By the will of J. R. Keaton, dated October, 1945, a spendthrift trust was set up for the benefit of plaintiff in error and others. One seventh of the income from the trust is to be distributed to Clarence J. Keaton from time to time during his lifetime and at his death the corpus of the fund goes to other designated persons. The testator died on April 3, 1946, and his estate has been duly administered in the County Court of Oklahoma County. The trust property has been distributed to the trustees and the sole question for determination here is the right of judgment creditors of the beneficiary to garnishee the income from the fund.

The will was made after the effective date of 60 O.S.1951 § 175.25. After the will was admitted to probate and on December 10, 1946, the trustees made their first distribution of income, under which the sum of $1,000 was distributed to Clarence J. Keaton. No contest was made in connection with the probate of the will. On October 2, 1947, Clarence J. Keaton, apparently being dissatisfied with the handling of the estate entered into a contract of employment with Logan Stephenson and C. W. Clift. Stephenson is now deceased and the cause has been revived in this court in the name of his administratrix, Ethel M. Stephenson. Under the written contract of employment the attorneys were to represent Keaton and protect his interest in the estate. He paid them a $50 cash retainer and agreed to pay them twenty-five percent of all monies or properties recovered by him from the estate. After the employment the attorneys learned that there were no irregularities in connection with the administration proceedings and that the closing of the estate was being delayed to obtain clearance from the proper taxing authorities in regard to the inheritance taxes on the estate. On October 22, 1947, tax receipts were obtained covering this inheritance tax and on November 1, 1947, the final account of the executors was filed. On the same date the sum of $2,500 was distributed to Clarence J. Keaton by the trustees.

The estate was closed without contest, but difficulties arose between Clarence J. Keaton and his attorneys in regard to their fee. In January, 1948, they instituted suit against Keaton for the sum of $888.88, which it was contended the plaintiff in error owed them. Keaton defaulted and on March 1, 1948, judgment was rendered for the amount sued for. Neither the petition nor the judgment disclosed the nature of the claim sued on, nor how the amount was arrived at. Since the amount of the judgment closely approximates twenty-five percent of the $3,500 that had been previously distributed to Keaton, we assume it was a suit on the contract and that the slight variance is an interest item.

The judgment was not paid and the judgment creditors caused garnishment to be issued to the trustees seeking to apply Keaton's interest in the earnings of the trust fund toward the payment of their judgment. On hearing the trial court found the judgment rendered was for necessary services rendered by the judgment creditors to Keaton and directed that the garnishment be sustained and $954.44 of such funds be paid to the plaintiffs in satisfaction of such judgment.

The right of the settler to create the spendthrift trust and the sufficiency of the trust provisions of the will to accomplish such purpose is not disputed. The validity of such a trust was recognized by this court in Frensley v. Frensley, 177 Okl. 221, 58 P.2d 307. It is conceded the creditors have no right to reach such fund unless it be under the provisions of Title 60, O.S.1951, § 175.25, wherein it is provided that the property may be reached in the hands of the trustees for 'necessary services...