Stern Bros. v. Hampton

Whitfield, J., delivered the opinion of the court. The debt incurred by the executrix and trustee to appellants was her individual liability in its origin. The estate was not the debtor of appellants. No judgment lien was acquired against the trustee, individually even, until after the children (all then of age) had quitclaimed to the trustee, and she had mortgaged the estate to the Lombard Investment Company. The equity which the creditor of the trustee of an estate has (where the debt incurred is, as here, one authorized by the instrument creating the trust) is that he is substituted to the right of the trustee to recover the debt out of the trust estate, where the estate is indebted to the trustee, if the trustee has paid it, or would be so indebted should the trustee pay it, and such trustee is insolvent or nonresident. To prevent a failure of justice in such state of case, “the rule of policy yields to the higher considerations of justice and equity, and the creditor may be substituted to the exact position which the trustee would occupy if he had paid or should pay the demand and seek reimbursement out of the estate. ’ ’ This is the principle of Clopton v. Gholson, 53 Miss., 466; Norton v. Phelps, 54 Miss., 467; and Woods v. Ridley, 27 Miss., 119. [564] But the bill is not framed in this aspect. It does not allege that the trustee is insolvent or nonresident. On the contrary, its chief ground for relief is that, under the terms of the will, neither the children nor the trustee had any authority to máke the conveyances by them executed, and they are all null and void, and that the trustee is still clothed with the legal title, and she and the other beneficiaries with the equitable title to the estate, and that the trustee is hence not insolvent. So, also, no relief can be administered on the ground that the quitclaim deeds from the children to the trustee were voluntary and without consideration. A debtor cannot make a valid voluntary conveyance unless he leaves out of such conveyance property accessible to execution amply sufficient, in the ordinary course of events, to satisfy his then existing legal liabilities. But the children were not the debtors of appellants. Their mother (the trustee) was appellant’s debtor. The chief reliance of appellants is the proposition that the widow took, under the will, an estate for her life or widowhood; that she was required, as trustee, to collect the income and apply it to the support and maintenance of herself and children during her life or widowhood; that the trust was thus an active one; that hence, “ until the death or marriage of the widow, no one of the children would, own, or could claim, any part of the testator’s estate, except the right to a support and education out of the rents and profits, and that no one of the children, nor the widow, could sell, alienate or convey or incumber any part of the estate, or any undivided interest in the same, except his or her individual interest in the reversion after the death or marriage of the widow, ’ ’ and that since the bill alleges, and the demurrer admits, that there has been ‘ ‘ no division of the estate nor allotment of shares,” the legal title has always remained in the widow, impressed with the trust declared in item two of the will, and that “neither the children nor the widow, nor both together, could by any kind of conveyance, absolute or conditional, in mortgage or trust, divest [565] the legal or beneficial title out of the trustee or cestuis que trustent." We cannot concur in this view. There is no provision in this will against alienation or anticipation, nor for forfeiture. The whole equitable interest is vested in the children and the widow. No one else has any interest therein. There is no devise over, and hence we are unable to see why the children could not convey their equitable interest to the mother, and why she could not then validly make the mortgage to the Lombard Investment Co. The case does not fall within the principle of spendthrift trusts. Leigh v. Harrison, 69 Miss., 923; Nichols v. Eaton, 91 U. S., 716; Pope's Ex'rs. v. Elliott, 8 B. Mon., 56. The beneficiaries here have what Mr. Justice Miller, in Nichols v. Eaton, supra, calls ‘ substantial rights, which the appropriate court would enforce” in their favor on their demand. Says Mr. Gray, in his invaluable work on Restraints on the Alienation of Property, § 116: “Although trustees have a discretion as to the time, mode or amounts in which a trust fund is to be applied for the cestui qui trust, yet, if no one else has any interest in the fund, it can be taken for his debts. ’ ’ And so it could be voluntarily aliened. See Gray on Restr. on Alien, of Prop.-, §§ 111, 116, 167, 250, and the authorities cited; Perry on Trusts, § 386. It must be noted, too, that the children were all of age when they quitclaimed to their mother, and did so after the .accrual of the period when each one was to have paid over to him or her one-half of his or her distributive share, and at a time (nearly twenty years subsequent to the testator’s death) when there could scarcely be any longer ‘ ‘ any reasonable probability of litigation against his estate. ’ ’ Since the whole equitable interest was in the widow and the children, and no one else was interested, and there are no provisions against alienation or anticipation (which provisions, according to the weight of authority, whether applied to a fee or life estate, legal or equitable, are void, save in the case of [566] spendthrift trusts and equitable life estates of married ■women. Gray’s Restraints on Alienation of Property, p. 193c), and the judgment in favor of appellants was not rendered till after the execution of the mortgage or trust deed to the Lombard Investment Company, we are of opinion that this contention of appellants is untenable. The demurrer was properly sustained. Affirmed.