Binns v. LaForge

Mr. Justice Hand delivered the opinion of the court: This is an appeal by the complainant in a cross-bill in the' nature of a creditor’s bill, seeking to apply in payment of a judgment against Gertrude M. Talbott and Benjamin S. Talbott, her husband, the income upon certain trust funds in the hands of the executors of Garrett M. LaForge, deceased, set aside for the benefit of said Gertrude M. Talbott by Garrett M. LaForge, her grandfather, in his will. First—David H. LaForge and Harry C. Thompson, as executors, by virtue of the terms of the will of Garrett M. LaForge, deceased, hold in trust all of the property given to Gertrude M. Talbott by said will, whether the same is real or personal. The execution of the trust thus created requires that said executors, as trustees, retain the possession, control and management of said estate, and the only interest Gertrude M. Talbott has in said estate is the right to receive from said trustees the yearly income thereof during her life. The trust is an active one, and the trustees, after accepting the trust and taking possession of the property, had no power to delegate such trust, and the attempt to convey the subject matter thereof to Gertrude M. Talbott was void and of no effect. The case must therefore be considered the same as though said deeds had never been made. In Williams v. Evans, 154 Ill. 98, Mrs. Williams conveyed her estate to trustees upon condition that they should pay her the income thereof during her life, and upon her death should use the body of the estate with which to purchase a site and erect thereon a church. After the execution of the trust deed and the receipt of the estate the trustees surrendered the estate into the custody of Mrs. Williams. On page 106 it is said: “Upon the execution and delivery of the trust instrument and the property therein described, by Mary Williams to the trustees, the rights of the parties became fixed, and the trustees, after accepting the trust, had no authority to deliver the possession of any of the property named in the trust instrument to Mrs. Williams, and the fact that they disregarded their duty in this regard did not affect the validity of the transaction as originally made. If there was a complete delivery of the trust instrument, and the property therein described, to the trustees, as we think there was, the subsequent acts and declarations of Mrs. Williams and the trustees cannot defeat the trust.” Second—Can the income upon the trust fund, which .the will provides shall be paid by the trustees to Gertrude M. Talbott during her life, be reached while in the hands of the trustees by her creditors by creditor’s bill? We think not, as by statute (1 Starr & Cur. Stat. chap. 22, sec. 49,) trust property, “when such trust has, in good faith, been created by, or the fund so held in trust has proceeded from, some person other than the defendant himself,” is expressly excepted from property which may be reached by a creditor’s bill. The trust fund in this case proceeded from Garrett M. LaForge, a person other than Gertrude M. Talbott, and falls within the letter and the spirit of this statute, and is protected. In ReQua v. Graham, 187 Ill. 67, it is said, trusts thus created “rest in a large part upon the distinct ground that a creditor is not defrauded, and-therefore has no cause of complaint, because the owner of property, in the free exercise of his will, so disposes of it that the object of his bounty, who parts with nothing in return, has a sufficient income provided for and applied to his life support.” The chancellor, in construing this statute, adopted the New York rule, which is based upon an express statute, and held only so much of the income from this trust estate exempt as may be necessary for the maintenance of the beneficiary, Gertrude M. Talbott, and her children who were dependent upon her for support. Whether or not such rule should be. engrafted upon our statute we need not now consider, as no cross-errors have been assigned, and such error, if any it is, was not prejudicial to appellant, and he cannot complain. Third—The statute is not designed to protect the trust fund from the voluntary alienation of the cestui que trust, and there being no restriction in this will, there is no reason why Gertrude M. Talbott might not in equity assign said income, or a part thereof, to James Ryan, as security for a debt which she owed him. This is, in effect, all that was done by the assignment to him of said lease. Fourth—The minor children of Gertrude M. Talbott were parties defendant to the original and cross-bills, and we think the court properly appointed a guardian ad litem to defend for them, and ordered him paid, as such guardian ad litem, out of the funds in the hands of the trustees. Said minors were interested in the subject matter of the suit, they being the owners of the body of the estate, subject to the right of their mother to receive the income therefrom during her life, and it was proper their interests therein should be protected by a guardian ad litem. Fifth—The contention of the appellant that he is entitled to a preference over the other cross-complainants by reason of the fact that his cross-bill was filed first, is without force. The fund and all the parties interested, including the appellant and the other judgment creditors, were brought into court by the original bill. Under such circumstances no one judgment creditor, by cross-bill, could obtain- any advantage over the other judgment creditors by reason of the fact that his cross-bill was the one, in point of time, which was first filed with the clerk. Neither do we concur in the contention of appellant that the transactions between the trustees and Gertrude M. Talbott amounted to an equitable assignment of the future income of said trust estate for the benefit of her creditors. The language of the request, after stating that the title should revert to the trustees, is: “And they shall be entitled to the immediate possession of the same, and shall have the right to rent said lands and collect the rents thereof, and apply the same to the payment of all valid liens or encumbrances upon and against said lands, and to the necessary repair of the fences and buildings thereon, and the insurance of said buildings,” etc. This provision was made for ¿the protection and benefit of said trustees, and not for the benefit of the creditors of Gertrude M. Talbott, and such creditors can take no benefit by reason thereof. We find no reversible error in this record. The decree of the circuit court will therefore be affirmed. Decree affirmed.