White v. Bacardi

• Decision Date: 24 January 1984
• Docket Number: Nos. 82-943,82-996,s. 82-943
• Citation: 446 So.2d 150
• Parties: Robert B. WHITE, Trustee and Luis Facundo Bacardi, Appellants, v. Adriana BACARDI, Appellee.
• Court: Florida District Court of Appeals

Page 150

446 So.2d 150

Robert B. WHITE, Trustee and Luis Facundo Bacardi, Appellants, v. Adriana BACARDI, Appellee.

Nos. 82-943, 82-996.

District Court of Appeal of Florida,

Third District.

Jan. 24, 1984.

Rehearing Denied March 19, 1984.

Steven Naclerio, Miami, Roger D. Haagenson, Fort Lauderdale, for appellants.

Nard S. Helman, Miami, for appellee.

Before SCHWARTZ, C.J., and NESBITT and FERGUSON, JJ.

FERGUSON, Judge.

Husband, the beneficiary of a spendthrift trust, along with one of the trustees, appeals an order of the trial court directing that the trust income be garnished to satisfy a provision in the final judgment of dissolution which requires husband to pay $2,000 per month in alimony, and which also provides for a continuing writ of garnishment for future alimony payments without further order of court.

The main issue is whether the income from a spendthrift trust is exempt from legal process to enforce a court ordered payment of alimony and attorney's fees to an ex-wife. We answer this question in the affirmative, and hold that such income is exempt.

The parties were married for only two years and had no children. It was the second marriage for each of them. The final judgment dissolving the marriage incorporated a property settlement agreement whereby the husband agreed to pay the wife $2,000 per month until the death of either of them or until the wife's remarriage. The wife subsequently obtained two judgments for unpaid alimony, with execution authorized, in the total amount of $14,000. She obtained a third judgment for attorney's fees in the amount of $1,000. In aid of execution on the three judgments, she served a writ of garnishment on Robert White as one of the three trustees of the spendthrift trust (two signatures are required for a disbursement). Additionally, she obtained an order imposing a continuing garnishment against the trust income for future payments of alimony as the sums became due. ¹

A history of the case is pertinent to the discussion. In 1971, prior to the marriage of the parties (and apparently during the marriage of the husband and his first wife), Louis I. Bacardi, the settlor, after consulting with counsel as to the validity of spendthrift trusts in Florida, created the subject trust, by terms of which no part of his son's beneficial interest was to be subject to execution to satisfy the son's debts. The trust provided that the son (appellant-husband) and the three children of his first marriage would be supported from the trust income. The agreement further provided in paragraph nine:

No part of the interest of any beneficiary of this trust shall be subject to hypothecation, pledge, transfer or subject to any debt of said beneficiary or any judgment of said beneficiary or process in aid of execution of said judgment.

We make two observations at this point. ² First, Florida courts have recognized as valid and enforceable spendthrift provisions in a trust whereby the trust income is protected as inalienable from acts of the beneficiary or those of his creditors. Waterbury v. Munn, 159 Fla. 754, 32 So.2d 603 (1947). Second, Florida has enacted no legislation which limits or qualifies the validity of spendthrift trusts, compare Missouri and Pennsylvania, ³ nor has it passed any law which specifically exempts spendthrift trust income from legal process. Cf. § 122.15(1), Fla.Stat. (1981) (benefits accruing under Florida Retirement System Act shall not be subject to "any legal process whatsoever").

There are no reported Florida cases which address this precise question. We have waded through many cases and statutes of other jurisdictions and find only a total absence of uniformity. Three basic schools of thought exist, with assorted variations, as to whether the income from a spendthrift trust which names the husband as beneficiary is exempt from execution to satisfy a court ordered payment of alimony to a wife after the marriage is dissolved. One view is that the trust income can be reached. The opposing view is that an ex-wife may not reach the trust unless it is clear that the settlor intended the former spouse to share as if she were a beneficiary. A third view is similar to the first in that it permits a former wife to reach the trust income but imposes a qualification or limitation that the extent to which, if any, the trust income will be diverted depends upon the needs of the former spouse and the fairness to the trust beneficiary. We examine the rationales given by these courts in reaching their decisions.

Courts which adopt the view that a wife or former wife may reach the trust income rely upon the husband's legal obligation to provide for the support of his wife and children. In this regard, In Re Moorehead's Estate, 289 Pa. 542, 137 A. 802 (1927) is hailed as the leading spendthrift trust case. Moorehead holds that a deserted wife may reach the trust income for support monies, relying in part on the theory that the obligation of support is not a true debt because of the legal unity of a husband and wife. The case also relies heavily on the notion that it is against public policy to refuse to permit a wife to reach the income of a spendthrift trust. The court stated:

Public policy is not so vague and wavering a matter as not to be rightly invoked in a case of this character, where the degenerating tendencies of marital relations of the present day are so faithfully exemplified by one who comes into court and demands judicial condonation of his violations of law. In every civilized country is recognized the obligation, sacred as well as lawful, of a husband to protect and provide for his family, and to sustain the claim of the husband in the case at bar would be to invest him with a right to be both a faithless husband and a vicious citizen. 137 A. at 806.

Other states which have permitted a former wife to reach the income of a spendthrift trust to satisfy an alimony award have done so solely on public policy grounds, finding that the husband's duty to support is more compelling than the enforcement of a trust in accordance with a settlor's expressed intent. See Safe Deposit & Trust Co. of Baltimore v. Robertson, 192 Md. 653, 65 A.2d 292 (1949) (the rule that gives legal effect to spendthrift provisions as against creditors should not be extended to claims for alimony as the wife is a favored suitor and her claim is based upon the strongest grounds of public policy); Lucas v. Lucas, 365 S.W.2d 372 (Tex.Civ.App.1962) (it is against public policy to allow a beneficiary of spendthrift trust to be well taken care of when those who have every right to look to him for support are doing without); Dillon v. Dillon, 244 Wis. 122, 11 N.W.2d 628 (1943) (public policy is not so vague and wavering as to permit a spendthrift trust beneficiary to be both a faithless husband and vicious citizen).

This is essentially the position taken by the Restatement (Second) of Trusts § 157 (1959), which provides: ⁴

§ 157. Particular Classes of Claimants. Although a trust is a spendthrift trust or a trust for support, the interest of the beneficiary can be reached in satisfaction of an enforceable claim against the beneficiary,

(a) by the wife or child of the beneficiary for support, or by the wife for alimony; ....

Safe Deposit & Trust Co. of Baltimore, supra, purports to follow the Restatement view and collects other cases which reach the same result by applying the Restatement rule. E.g., Keller v. Keller, 284 Ill.App. 198, 1 N.E.2d 773 (1936); Clay v. Hamilton, 116 Ind.App. 214, 63 N.E.2d 207 (1945); In Re Sullivan's Will, 144 Neb. 36, 12 N.W.2d 148 (1943); Cogswell v. Cogswell, 178 Or. 417, 167 P.2d 324 (1946). While the Restatement claimed--in 1935--to represent the majority view, it has been criticized as "far too broad" and unrepresentative of the state of the law. Seidenberg v. Seidenberg, 126 F.Supp. 19, 21 (D.D.C.1954), aff'd 225 F.2d 545 (D.C.Cir.1955). The Restatement view has been specifically rejected by several jurisdictions, e.g., Roorda v. Roorda, 230 Iowa 1103, 300 N.W. 294 (1941); Bucknam v. Bucknam, 294 Mass. 214, 200 N.E. 918 (1936); Erickson v. Erickson, 197 Minn. 71, 266 N.W. 161 (1936).

It is not universally agreed, however, that a husband's obligation to support the wife continues with the same cogency after a divorce, as the legal "unity" dissipates upon divorce. See, e.g., Garretson v. Garretson, 306 A.2d 737 (Del.1973) (court which accepted the argument that a wife who is separated from her husband is not a creditor of husband noted that there might be an entirely different situation if the parties were actually divorced, as the legal duty to support is no longer a factor); Kiffner v. Kiffner, 185 Iowa 1064, 171 N.W. 590 (1919) (once the trust income passes into the hands of the beneficiary, it becomes his unqualified property subject to legal process to satisfy his obligations, but so long as it is in control of the trustee, it is beyond the reach of the former wife who is no more than a creditor of the beneficiary).

Nor are the public policy arguments as strong in relation to a divorced wife. This was the view of the court in Lippincott v. Lippincott, 349 Pa. 501, 37 A.2d 741 (1944), the same court which had seventeen years earlier decided. In Re Moorehead's Estate, supra. In Lippincott, the Pennsylvania court did not permit an ex-wife to reach the income from a spendthrift trust, holding:

After such complete and final separation it is not considered that any public policy requires the allowance of such an extraordinary and drastic remedy as seizure by execution of the income of a spendthrift trust, against the desire and intent of the creator of that trust. 37 A.2d at 743.

Other jurisdictions have embraced the Lippincott view that the public policy favoring the husband's obligation of support cannot prevail over the express intent of a spendthrift trust's creator. See Schwager v Schwager, 109 F.2d 754 (7th Cir.1940) (court acknowledges...