Mitchell v. Choctaw Bank

• Decision Date: 08 June 1914
• Docket Number: 16577
• Citation: Mitchell v. Choctaw Bank, 107 Miss. 314, 65 So. 278 (Miss. 1914)
• Court: Mississippi Supreme Court
• Parties: C. T. MITCHELL et al v. CHOCTAW BANK

65 So. 278

107 Miss. 314

C. T. MITCHELL et al v. CHOCTAW BANK

No. 16577

Supreme Court of Mississippi

June 8, 1914

APPEAL from the chancery court of Union county. HON. J. Q. ROBINS Chancellor.

Bill by the Choctaw Bank against C. T. Mitchell and others. From a judgment overruling their demurrer, defendants appeal.

The facts are fully stated in the opinion of the court.

Reversed.

Jones &amp Knox, for appellant.

The will made an exhibit to the bill creates an active trust, and if the defendant, C. T. Mitchell, in the court below, had any interest in the estate under the said will, the court will not condemn it for the sale of his debts. Stancel et al v. Hahn et al., 69 Miss. 616; Hill v. Fuller et al., 39 So. 53; Murdock v. Murdock, 97 Miss. 690. Appellant, C. T. Mitchell, under the will, will inherit part of the estate if he should live until the youngest child becomes of age, and there is any part of the estate on hand at that date. Where there is only a contingent estate and that estate is under a will which creates an active trust, then said estate cannot be condemned for the debts of the legatee under said will.

To carry out the prayer of appellee's bill would be to tie the hands of the executor under said will, becloud the estate, and virtually tie up the property under said active trust. See authorities above. The purpose of the will, made an exhibit to the bill, was that said estate should be to support and maintain the children of the executrix, and no part of said property should be condemned for debt. Leigh v. Harrison, 69 Miss. 923.

Anderson & Long, for appellee.

There is no doubt that the will creates an active trust, but this does not necessarily mean that whatever interest C. T. Mitchell has in the property cannot be reached by his creditors. It is not a "spendthrift" trust, and has none of the ear-marks, and not attempted to be made such by the testatrix. It may be that the court will not condemn the interest of the appellant, C. T. Mitchell, for sale to pay his debts, but under the prayer for general relief, the court does not have to do this, but has the power and right, and it is its duty to do so, to solve this matter so as not to interfere with the trust, and merely order the trustee, when the time arrives for the distribution of the estate, to pay to appellee its debts and costs of this cause, before he pays anything to C. T. Mitchell or his assignees.

Let us see what interest, appellant, C. T. Mitchell, has in this property; the bill states, and the demurrer confesses, that his interest is worth fifteen thousand dollars, and it is a well-known rule of construction, that in the ascertainment of what equitable title a party has to property, the same rules of construction are applied, as are applied in arriving at the character of legal title held by a party to property; 39 Cyc., page 228, sub-section 3.

Chancery is the proper and only forum in which the rights of appellee could be enforced in this matter. It is the only court that can protect the rights and interest of all parties. The legal title to this property is now in the trustee, and will so remain until the youngest child of the testatrix arrives at the age of twenty-one years. This legal title vested in the trustee immediately upon the death of the testatrix. The trustee, under the will, has no equitable estate, but only the legal title, with the power and authority to do the acts in reference to the property, of which the testatrix died seised and possessed, set out in the will. The equitable title to the one-sixth interest of C. T. Mitchell, immediately upon the death of his mother, vested in him, and this equitable title was perfected in fee simple, subject only to be defeated on the death of the said C. T. Mitchell before the youngest child of the testatrix arrives at the age of twenty-one years. In other words, it was a condition subsequent and therefore, the equitable title vested in C. T. Mitchell to the one-sixth interest in his mother's estate (there being six children at the time of her death), immediately upon her death. The only condition upon which this equitable title could possibly pass out of him, would be his death before the youngest child of the testatrix arrived at the age of twenty-one years. Presley v. Rogers, 24 Miss. 523. In the case of Lee v. Harrison, 69 Miss. , the will created what is known as a "spendthrift" trust, was upheld and relief to the creditors denied, but in the last paragraph of the opinion, bottom of page 938 and top of page 939, the court practically says that if the question had been presented to the court, that the income from the estate was more than sufficient to support the beneficiary in the will; that the claim could be and would be adjusted by a court of chancery, to the claim of creditors. There was no question about the trustee in this case being in active charge with all kinds of power under an active trust.

As illustrative and instructive of the kind of an estate now held and so held by appellant, C. T. Mitchell, in this property by virtue of his mother's will since her death, see; Column 1, 31 N.E. Rep., p. 916. The case of Stancel et al. v. Hahn et al., 96 Miss. 616, cited by appellants, was an attempt to sell, under execution at law, the equitable interest of a beneficiary in trust property, where there was an active trust, and has absolutely no application to the principles involved in the present case. It was an attempt under an active trust, and, it has been repeatedly held that this section cannot be proceeded under, to subject interest so held. We confess that we are unable to see what application the case of Murdock v. Murdock, in 97 Miss. cited by appellants, has to the present case. The case of Hill v. Fulmer et al., cited by appellantes, in 39 So. 53, would be applicable, if this were a proceeding to attempt to subject any interest that one of the children of appellant, C. T. Mitchell, might have in said property, in case of the death of its father before the youngest child of the testatrix became twenty-one years of age. This was also an attempt to sell, under execution at law, instead of by proceeding in chancery.

There are two well-defined classes of trust estates. One, in which the trust is a mere or passive trust, in which the trustee has the bare, naked legal title, with no duties to perform, and a trust estate so created, may be sold under execution at law, as provided by our statute, and as repeatedly decided, this is the only kind of trust estate that can be reached by execution.

An equitable interest held by a beneficiary under an active trust, can only be reached by proceedings in equity, and can always be reached, if the beneficiary has a present, valid, equitable interest, and the subjection of the same will not interfere in the execution of the trust, unless the trust created is what is known as a "spendthrift" trust.

Let us see if a court of equity has the power to protect the rights of this creditor of appellant, C. T. Mitchell, and at the same time, not interfere with the execution of the trust by the trustee. It may be that if this interest was actually sold out, and an attempt was made to put the purchaser in possession of the property, then this would interfere with the trustee, but it is not to be presumed that the court will order this done, when the prayer of the bill is for general relief, and the court could simply declare a lien in favor of appellee, for the amount of its debts, with interest and the costs, and order the trustee, when the time arrives for the distribution of said estate, before paying appellant, C. T. Mitchell, or his assignees, anything to first pay off and discharge the debt of appellee, or the court could make an order that the trustees go ahead with the administration of the trust estate, and when same was divided, and the share or interest of appellant, C. T. Mitchell, was ascertained and set aside, that it would be held by the said C. T. Mitchell, or his assignees, subject to lien in favor of appellee for the amount of its debt, etc., and perhaps there are other safe and satisfactory ways in which the rights of all parties could be protected and the discharge of the duties of said trustee be interfered with in no way at all.

OPINION

REED, J.

Appellee the Choctaw Bank, filed its bill in chancery court, seeking to subject the interest of app...