Provident Trust Co. v. Banks

• Decision Date: 22 November 1939
• Citation: 24 Del.Ch. 254,9 A.2d 260
• Parties: PROVIDENT TRUST COMPANY, formerly known as Provident Savings & Loan Association, a corporation existing under the laws of the State of Delaware, and CITIZENS BUILDING CORPORATION, formerly known as Citizens Savings Bank, Inc., a corporation of the State of Delaware, v. ADELAIDE A. BANKS and WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under a trust created by Adelaide A. Banks
• Court: Court of Chancery of Delaware

9 A.2d 260

24 Del.Ch. 254

PROVIDENT TRUST COMPANY, formerly known as Provident Savings & Loan Association, a corporation existing under the laws of the State of Delaware, and CITIZENS BUILDING CORPORATION, formerly known as Citizens Savings Bank, Inc., a corporation of the State of Delaware, v. ADELAIDE A. BANKS and WILMINGTON TRUST COMPANY, a corporation of the State of Delaware, Trustee under a trust created by Adelaide A. Banks

Court of Chancery of Delaware, New Castle

November 22, 1939

CREDITORS' BILL for an equitable execution.

Case heard on demurrer to the bill on the ground that it did not state any cause of action cognizable in a court of equity.

The facts alleged will appear in the opinion of the court.

Demurrer sustained.

William Poole and Thomas Herlihy, Jr., for complainants.

William H. Foulk and William S. Satterthwaite, of the firm of Satterthwaite & Foulk, for defendant Adelaide A. Banks demurrant.

OPINION

THE CHANCELLOR:

The complainants have filed a bill for an equitable execution, and the case is before this court on a demurrer thereto.

It appears from the allegations of the bill that Adelaide A. Banks, one of the defendants in this action, is a defendant in two several judgments, of record in the Superior Court for New Castle County, entered on bonds given to secure notes, neither of which judgments has been paid. J. Laurence Banks, her husband, was, also, a defendant in both of these judgments, but died in December of 1934. William I. Stewart and Gertrude M. Stewart were likewise co-defendants in one of them. J. Laurence Banks had no property, whatever, at the time of his death, but Adelaide A. Banks was the sole beneficiary in an insurance policy on his life, and, after his death, the amount represented by that policy was duly paid to her. She subsequently deposited that money to her individual account in the Wilmington Trust Company, a banking institution in the City of Wilmington, having trust powers, and the other defendant in this action. On November 18th, 1935, Mrs. Banks entered into a trust agreement with the Wilmington Trust Company, and transferred the insurance money in question to that institution, as trustee. Under the terms of the trust agreement, the income on that fund was to be paid to her during her lifetime, and, at her death, the principal sum and any undistributable income thereon was to be paid to her living issue. Prior to the November Term of the Superior Court for New Castle County executions were issued on both of the above judgments to the Sheriff of that county, but were returned "nulla bona."

The bill, also, alleges that the complainants have no knowledge of any other property in the State of Delaware belonging to the said Adelaide A. Banks, or to William I. Stewart or Gertrude M. Stewart, the other defendants in one of the unpaid judgments, and that they, therefore, have no adequate remedy at law.

In support of her demurrer, Mrs. Banks, among other things, points out that the bill does not allege that the transfer of the insurance money to the Wilmington Trust Company, as trustee, was for the fraudulent purpose of defeating the rights of her creditors. That is true, but while fraud is a well recognized ground of equitable jurisdiction, and the fraudulent disposition of property may, therefore, be the basis of a bill for an equitable execution, when there is no adequate remedy at law (Newell, et al., v. Morgan, et al., 2 Del. 225, 2 Harr. 225), that is not the only ground on which such a bill may be based. 4 Pom. Eq. Jur., (4th Ed.) § 1415; 5 Pom. Eq. Jur. (4th Ed.) § 2294 (§ 871); Donovan v. Finn, 1 Hopk. Ch. (N. Y.) 59, 14 Am. Dec. 531; Erdwin v. Oldham, 6 Yerg. (Tenn.) 185, 27 Am. Dec. 458.

A judgment at law and an unsatisfied execution thereon are usually essential in order for it to appear that there is no adequate remedy in that court. Newell, et al., v. Morgan, et al., 2 Del. 225, 2 Harr. 225; 4 Pom. Eq. Jur. (4th Ed.) § 1415; 5 Pom. Eq. Jur., § 2295 (872). The allegations of the bill recognize this rule.

A creditors' bill will, also, frequently lie where other well recognized grounds of equitable jurisdiction appear, and there is no adequate remedy at law. 5 Pom. Eq. Jur., (4th Ed.) § 2300 (§ 877); 14 Amer. Jur. 679; Donovan v. Finn, 1 Hopk. Ch. (N. Y.) 59, 14 Am. Dec. 531; see, also, Newell, et al., v. Morgan, et al., 2 Del. 225, 2 Harr. 225. The latter case involved the seizure of a resulting trust in certain real estate, the title to which was taken in the name of Morgan's children, but which was paid for by the transfer of certain personal property belonging to him, and at the expense of his creditors. To what extent such a bill will ordinarily lie for the seizure of an equitable interest in property, held on a general express trust, need not be considered, but a recent statutory provision is important. § 4415, Rev. Code 1935.

Whatever the rule, with respect to spendthrift trusts may be, it has been said that even when fraud is not alleged the equitable interest of a person who creates a trust for her own benefit is usually subject to seizure by a creditors' bill; and that any other rule would be contrary to public policy. 1 ...