Smith v. Towers

Alvey, C. J.,

filed the following dissenting opinion in which Bryan, J., concurred:

I. am quite aware that dissenting opinions are often regarded as useless and ungracious work; but, with my settled convictions in' regard’to the principles involved in this case, I cannot do otherwise than enter my dissent from the opinion of the majority of' the Court; and I think it proper to state the reasons of that dissent.

This is an attachment proceeding instituted to reach and subject to condemnation the rights and interest of Robert J. W. Garey, the debtor, accruing under his father's will,—such interest being iii the hands of a trusted, in whom the legal estate in the land is vested, and whose duty it is, by the terms of the will, to receive and pay over the annual rents and profits of the estate to the son for life. This right and estate of the son is limited by the testator, thus: “That he [the trustee] shall pay or cause to be paid unto my son, Robert J. W. Garey, as the same may accrue, the net rents, income and profits arising from said farm and property, after dedxicting such sums of money as may be necessary to satisfy and pay the taxes and assessments levied thereon, and needful repairs to buildings *92 and. «fencing, and also a sum sufficient to purchase fifteen hundred bushels of lime during each year for the space of twelve years, to he applied to the fields of said farm as they are cultivated in corn; the said net rents, income and profits to he paid to the said Robert J. W. Grarey, (into his own hands, and not into another, whether claiming by' his authority or otherwise,) so long as he, the said Robert J. W. Grarey, shall live; and from and after the death of him, the said Robert J. W. Grarey, then, in trust,” &c.

It is insisted, on the part of the debtor, the devisee for life, that the right and estate devised to him, by the clause of the will just quoted, cannot he-made liable to the payment of his debts, and that he is entitled to receive and enjoy the rents and income of the estate for his life, in utter defiance of all effort by his creditors to reach sich rents and income by legal process. And this contention is fully sustained by the opinion of the majority of this Court, but to which I cannot for a moment assent.

Upon the contention of the debtor, the beneficial devisee for life, two questions arise: 1st, Whether the testator, by devising the legal estate to a trustee, with directions to pay over the rents and profits to the son for life, could lawfully impose a restriction upon the ordinary right of alienation of such equitable life estate, or protect such estate from all liability for the debts of the son, without any cesser of the estate devised; and, 2ndly, whether, if the testator had such right, he has effectually exercised the same, by the terms employed in the will.

1. As will be observed, there is no -cesser or termination of the estate provided for, in respect to the devise to the son, in the event of attempted alienation, or seizure by creditors. The rents and profits of the farm are simply directed to be paid over to the son him *93 self for life, and no alternative or contingent disposition is made of them whatever. There is certainly, as observed by Lord Eldon, in Brandon vs. Robinson, 18 Ves., 432, an obvious distinction between a disposition to a man, until he becomes bankrupt, and then over, and an attempt to give him property, and to prevent his creditors from obtaining an interest in it, though it is his absolutely for life or in fee.

I had supposed that if there was any principle well settled in the law of property, it was that upon any gift or grant of a beneficial fee simple or life estate, whether legal or equitable, there was an incident pertaining to such estates that could not be severed, and that was the right and power of the donee or grantee to alienate the estate, and to charge it with his debts. And that any attempt to restrain the exercise of such right and power, except by way of cesser or limitation over of the estate, would be regarded as repugnant to the estate, and therefore without effect. This is certainly the well established doctrine in that system of jurisprudence from which we derive both the principles of the common law as applied here, and the principles and doctrine of trusts as applied and enforced by our Courts of Chancery. And it is an undeniable proposition that, as a general rule, Courts of equity, in regard to trust estates, adopt the rules of law which are applicable to legal estates; or, in other words, in regard to trusts, the analogy to estates at the common law is not only followed, as to the rights and interests of the cestui que trust, but also as to the remedies to enforce, preserve, and extinguish those rights and interests. 1 Sand., Uses & Trusts, 269; 2 Sto. Eq. Juris., secs. 974 a, 975. According to the rule of the English law, therefore, whatever rights in property a man may acquire and hold beneficially, whether legal or equitable, he may alienate; and it is equally clear that whatever a man *94 can demand of liis trustee his creditors may demand of him. And this is upon the plainest principles of morality.and common honesty, as well as upon reason and a sound public policy. .

As I have already stated, there is no reverter to the estate of the testator, or limitation over, upon any attempted alienation, or seizure of the interest of the devisee for life, by creditors. But it is supposed that the interest of the devisee for life is effectually hedged against his creditors by the simple direction that the rents and income should be paid “into his own hands, and not into another, whether claiming by his authority or otherwise.” To such contention I cannot assent.

The whole theory and,history of the English law is against such contention. In Coke upon Littleton, page 223a, Sir Edward Coke, in his commentary upon sect. 360 of Littleton, which treats of conditions against alienations as being void, says: “The like law is of a devise in fee upon condition that the devisee shall not alien; the condition is void; and so it is of a grant, release, confirmation, or any other conveyance, whereby a fee simple doth pass. For it is absurd and repugnant to reason that he, that hath no possibility to have the land revert to him, should restrain his -feoffee in fee simple of all his power to alien. A.nd so it is if a man be possessed of a lease for years, or of a horse, or of any other chattel, real or personale, and give or sell his whole interest or propertie therein, upon condition that the donee or vendee shall not alien the same, the same is void, because his whole interest and propertie is out of him, so as he hath no possibilitie of a reverter; and it is against- trade and traffique, and bargaining and contracting between man and man.” And in Butler’s note to the Commentary on the next section of Little-ton, it is said, that “A power of suffering a common recovery, and of levying a fine within the Statute of 4 *95 Hen. 7 , and 32 Hen. 8 , is so inseparably inherent to tlie estate^of a tenant in tail, that any condition or proviso restraining or prohibiting it, is hold to be repugnant to the nature of the estate, and therefore void.”

Such then being the well settled and established principle in respect to the grant or devise of estates in fee simple or fee tail, (and this I do not understand to be anywhere controverted,) why should there be a different principle applicable to estates for life? The reason of the, principle against restraint of alienation and liability for debts, is the repugnancy of such restraint to the ordinary rights of property, and that property would thereby be withdrawn from the ordinary rules and channels of commerce and traffic among men. Why should a life estate, either legal or equitable, be tied up and fettered, it may be, for the greater part of a century, when the restraint upon alienation, either voluntary or by process of law, of an estate in fee or fee tail will not be tolerated at all? The English Courts have consistently and steadily refused to recognize any such distinction, but treat the right of alienation and liability for debts as inseparable incidents of the life estate, whether limited by way of trust or otherwise, except where there is a reverter or a cesser of the estate, dependent upon an attempted alienation, or seizure by creditors. This was laid down by Lord Eldox in Brandon vs. llobinson, supra, not as a novel or néwly invented rule of property, but as the settled law of England ; and in the course of his opinion he referred to the old case of Foley vs. Burnell, 1 Bro. C. C., 274, in regard to which he said: “A great variety of clauses and means was adopted by Lord Eoley with the view of depriving the creditors of his sons of any resort to their property; but it was argued here, and, as I thought, admitted, that, if the property was given to the sons, it must remain subject to the incidents of *96 property; and it could not be preserved from the creditors, unless given to some one else.” And in referring to this attempt on the part of Lord.Eoley, to exclude the creditors of his sons, by the nature of the trusts created under his will, Charles Butler, the distinguished real estate lawyer, and annotator of Coke upon Littleton, in note 132, to that work, at page '223b, (published in 1791,) says: “The illusory, nature of estates and trusts of this description raises a powerful objection to them on the ground of policy f; nor are they, perhaps, quite reconcilable to some of the fundamental principles of our law. Serious consequences, it is presumed, would ensue their coming into general, or even frequent, use.”

There are many cases in which the rule has been stated and applied, but in none more clearly than in Rochford vs. Hackman, 9 Hare, 475, 480, by the Vice-Chancellor, Sir George Turner. In that case he says, “First, property cannot he given for life any more than absolutely, without the power of alienation being incident to the gift; and that any mere attempt to restrict the power of alienation, whether applied to an absolute interest or to a life estate, is void, as being inconsistent with the interest given; and secondly, that although a life-interest may be expressed to be given, it may well be determined by an apt limitation over.” He further declares, “That property cannot be given for life any more than absolutely, without the power of alienation being incident to the gift, appears to me to he well settled by the cases of Brandon vs. Robinson, 18 Ves., 429, and Graves vs. Dolphin, 1 Sim., 66. In both of those cases there were gifts for life, with provisions which were directed against alienation, but in neither of them was there any proviso for determining the life-interest, or any gift over in the event of alienation; and the Court, in each of those cases, held that *97 the life-interest continued; and these cases are not, so far as I am aware, contravened by any authority.” Tn both the cases referred to, the directions to the trustees were to pay over to the legatees for life exclusively, and to no other person, the income; and terms of the most direct and explicit character were employed to exclude any claim on the part of creditors. But, notwithstanding, the legatees for life becoming bankrupt, the assignees were held to be entitled to the fund for the benefit of creditors. And so are many other cases that ■could be cited, if it were deemed necessary.

There is one well recognized exception to the general rule upon this subject, but that exception is sui generis, and is founded upon its own special reasons and policy. That exception is expressed in the usual clause against anticipation, in devises to and settlements upon married women, introduced in the time of Lord Chancellor Tiiurlow, for their special protection. This exception, and the reasons for it, have been well stated by the late Master of the Rolls, Sir George Jessel, in Bucklon vs. Hay, 11 Ch. Div., 645. In that case, the Master of the Rolls said: “In the first place, the law of this country says that all property shall be alienable; but there has been one exception to that general'law, for restraint on anticipation or alienation was allowed in the case of a married -woman. That was purely an equity doctrine, the invention of the Chancellors, and is, as I have said, an exception to the general law, which says that property shall not be inalienable. That exception was justified on the ground that it was the only way, or at least the best way,, of giving property to a married woman. It was considered that to give it to her without such restraint.would be, practically, to give it to her husband, and therefore, to prevent this, a condition was allowed to be imposed restraining her from anticipating her income, and thus fettering the free *98 alienation of her property." The incorporation of this, exception, and the reason for it, furnish strong proof, not only of the existence of the general rule, hut of the very special circumstances and pressing, reason under which an exception could he allowed to that general rule.

It is certainly not the fact, as has been sometimes suggested, that the English cases, to which I have referred, introduced any novel doctrine into the law. On the contrary, it has been very truthfully said, that they simply make application of a principle older than Taltarum’s Case. The history and growth of the English law, its principles and remedies, as they have been formulated from time to time, down to the most recent time, prove this. Indeed, the great merit of the celebrated rule in Shelley’s Case is, that it frustrates all unreasonable restraints upon alienation, and renders property liable for debts. As said by Professor Gray, in his admirable little treatise on the Restraints on the-Alienation of Property, see. 168, those cases are a part of the struggle of the law against feudalism, and against the attempt to give' the enjoyment of wealth without its responsibilities.

The course of legislation in this State aptly illustrates the policy, and shows the same tendency to-unfetter property, and to remove all restraints upon alienation, and to subject all interest in property to the debts and obligations of its owner. Just about the close of the war of the Bevolution, we find the Act of 1782, ch. 23, for simplifying the method of docking estates tail; and four years thereafter, we have the Act of 1786, ch. 45, directing the course of descents and converting estates tail general into fee simple-estates, and thus rendering such estates liable to debts. And then the Act of 1810, ch. 160, embodied in the Code, Art. 83, secs. 1, 2, provides that any and all *99 equitable estajes and interest in land, &c., shall be liable to execution for debt; and that any purchaser of such equitable estate or interest shall, upon payment of the purchase money, be entitled to an assignment or conveyance of such equitable interest, &e. There is no exception from the operation of this Act provided for, not even the estates of married women; though “as to the latter such exception was unnecessary, for as the law stood at that time, executions did not issue against married women. This legislation plainly shows that it was the object and policy of the Legislature to render all estates liable for debt, except such as might be exempt by express statutory provision. To allow life estates, whether legal or equitable, or whether of the value of one hundred dollars, or of one million of dollars, (because if it can be of one amount it may be of the other,) to be withdrawn from the operation of the law, does seem to me, with due respect to the oqfinion of others, to be plainly in contravention of the policy, if not the very letter and spirit, of the statute. That the intention of the testator, if not contrary to law, is to govern in the disposition of his estate, is certainly a well settled principle. But that this is always subject to the condition that no principle or positive provision of law can be violated or disregarded by the testator, is equally well settled. He cannot create an estate and clog the power of alienation, or relieve it from liability for debts, any more than he can create a perpetuity by an executory devise after an indefinite failure of issue, or after any other future event that may not happen until after a life or lives in being, and twenty-one years afterwards. A man may direct the disposition of his estate after his death, but this must be done in subjection to the established rules of law.

Indeed, no system of law can be founded in wisdom or sound public policy, that allows restraints upon *100 alienation, or which allows property to be withdrawn from commerce, and. rendered free from the honest obligation of its owner. Property is the basis of business confidence; and any law that destroys the basis of that confidence is detrimental to the public good. Any such law restrictive of alienation or liability for debts, operates to detract from the general utility and actual value of property. Moreover, it is an encouragement of idleness, and of a lack of enterprise ; and worst of all, it fosters a class who become habitually reckless and indifferent to their honest obligations, from a sense that they are entrenched beyond the reach of the law. And if the principle of exclusion of all liability for debts can be effectually annexed to property, without anj cesser of the estate, as means of protection against the improvidence of some, it must be allowed in respect to all; and with such principle established, we may well anticipate that, before many years, no inconsiderable portion of the property of the State, both real and personal, will be fettered with such restriction as that attempted to be imposed in this case.

It appears that there are a few State Courts, prominent among which are the Courts of Pennsylvania and Massachusetts, by which trusts, popxilarly known as Spendthrift tnists, whereby restrictions upon alienation and the liability for debts of the devisee or legatee for life, have been supported. But, until this case, no such trust has ever received the sanction of this Court; and the restrictive trust maintained in this case is purely one of judicial establishment. It is supposed, however, that the recent case of Nichols vs. Eaton, 91 U. S. 716 , has furnished authority for the rejection of the doctrine of the English Courts, and the adoption of this species of trusts in this State. But what was said in that case, in regard to such trusts, was entirely obiter, and was *101 in no manner required for the decision of the case as actually presented for decision. It furnishes, therefore, no authority for the decision of this Court. There, the mother of the bankrupt had bequeathed to him by will the income of a fund, coupled with a provision in the trust that on his bankruptcy or insolvency the legacy should cease, and go to his wife or children, if he had any, and if not, it should lapse into the general fund of the testatrix's estate and be subject to other dispositions. The assignee of the bankrupt sued to recover the interest bequeathed to the bankrupt, on the ground that this condition was void, as being against public policy. But the Supreme Court held, upon the case thus presented, that the condition, upon the happening of which the interest bequeathed to the son was to cease, rvas valid and effectual, and that no rights of creditors were violated thereby, nor any principle of policy contravened. This was the case actually presented, and with the decision of that case so presented, this Court has said it could make no question whatever. Warner vs. Rice & Knell, 66 Md., 443 . It was strictly in accordance with both the English and American authorities. It was the case thus presented, and nothing more, that was approved by the same learned Court in Hyde vs. Wood, 94 U. S., 523 . But after deciding the case, and showing that the bequest was in all respects valid, the learned Justice who delivered the opinion, proceeds to refer to and remark upon the decisions of certain State Courts, that hold a doctrine different from that held by the English Courts. And in conclusion he said : “We are not called upon in this connection to say how far we would feel bound, in a case originating in a State where the doctrine of the English Courts had been adopted so as to become a rule of property, if such a proposition could be predicated of a rule like this. Nor has the time which the *102 pressure of business in this Court authorizes us to devote to this case, permitted any further examination into the decisions of the State Courts. We have indicated our views in this matter rather to forestall the inference, that we recognize the doctrine .relied on by appellants, and not much controverted by opposing counsel, than because we have felt it necessary to decide it, though the judgment of the Court may rest equally well on either of the propositions which we have discussed. We think the decree of the Court below may be satisfactoria affirmed on both of them.”

It is manifest, I think, from this passage from the opinion, that what was said by the learned Justice, in apparent approval of the American cases cited by him, was merely obiter, and was not really intended to be anything more. The case originated in the State of Rhode Island, and the appeal was from the Circuit Court for the district of that State. In that State the doctrine of the English Courts prevails to its full extent and without qualification, and is therefore a rule of property- in that State. In Tillinghast vs. Bradford, 5 R. I., 205, cited both in the argument and in the opinion in Nichols vs. Eaton, the Supreme Court of Rhode Island held, in reference to a devise in trust for life of an income, to be paid to the devisee, and not to his assigns or to others, that an assignee for the benefit of creditors was entitled to have the income paid over to him. The Court, in its opinion, said: “ This has been the settled doctrine of a Court of Chancery, at least since Brandon vs. Robinson, 18 Ves., 429, and, in application to such a case as this, is so honest and just that we would not change it if we could. Certainly no man should have an estate to live on, but not an estate to pay his debts with. Certainly property available for the purposes of pleasure or profit should be also amenable to the demands of justice.” *103 But there are other reasons that preclude the inference that the Court, in Nichols vs. Eaton, intended, in what was said in regard to the American as distinguished from the English doctrine, to announce a definite judgment upon the subject. It is not to be supposed that the Court would, upon a question of such great general importance, undertake to examine authorities and formulate a definite conclusion, without making the least reference to its own opinion rendered hut a few years before, in the case of Nichols vs. Levy, 5 Wall., 433 . In that case, the authorities, both English and American, were brought to the attention of the Court, and it was said, in the opinion, with the apparent concurrence of the entire Court, that “It is a settled rule of law that the beneficial interest of the cestui que trust, 'whatever it may be, is liable for the “payment of his debts. It cannot be so fenced about by inhibitions and restrictions as to secure to it the inconsistent characteristics of right and enjoyment to the beneficiary, and immunity from his creditors. A condition precedent that the provision shall not vest until his debts are paid, and a condition subsequent that it shall be divested and forfeited by his insolvency, with a limitation over to another person, are valid, and the law will give them full effect. Beyond this, protection from the claims of creditors is not allowed to go.” And in support of this proposition wore cited by the Court, many of the English cases, and some of the American, and, in addition, 2 Sto. Eq. Juris., sec. 974a, where the doctrine is fully stated in accordance with the English authorities, as the settled law.

The length of this opinion renders it necessary that I should refrain from making special reference to the many American decisions upon this subject; but they have been fully collated and ably reviewed by Professor Gray, in his treatise on the Restraints on Alienation of *104 Property; and he has shown beyond question that the ^reat preponderance of American authority is in support of the doctrine as maintained by the English Courts.

There is one case to which 1 will refer, and that is Broadway National Bank vs. Adams, 133 Mass., 170 , much relied on in this case. That case, as it appears to me> is somewhat remarkable, though I do not perceive that it has much application to the case before us. In the opinion of the Court it is conceded, that, by the rules of the common law, such restraint upon alienation or liability for debts as was there imposed, would not be valid. “But,” says the Court, “the reasons of the rule do not apply in the case of a transfer of property in trust. By the creation of a trust like the one before us, the trust property passes to the -trustee with all its incidents and attributes unimpaired. He takes the whole lega] title to the property, with the power of alienation; the cestui que trust takes the whole legal title to, the accrued income at the moment it is paid over to him. Neither the principal nor the income is at any time inalienable.” 'Now, if the learned Court intended, by what was said by it, to lay it down as a general principle, that in any and all cases where the legal estate may be vested in a trustee, the power of alienatiou exists, irrespective of the special nature of the trust declared, and though alienation might be a breach of that trust, and that therefore the rule against restraints on alienation would not be violated, such proposition, I submit, would not stand the test of reason. The trustee holds the legal estate to serve the purposes of the trusts; and, except under special authority given, he cannot alienate the legal estate without committing a breach of trust, and the alienee would take the estate subject to the trust, and the conveyance be liable to be set aside. As I understand *105 it, it is because the beneficial and substantial ownership of property, though the legal estate may be in another, who is required to hold for the benefit of such substantial owner, is attempted to be secured to the use and enjoyment of the real beneficiary, exclusive of the ordinary incidents of property, that the rule against such restraint applies as well in equity as at the common law. Equitable as well as legal estates are property, and both species of estates are subject to the laws of proj^erty; and by those laws, both species of estates are alike subject to the law of alienation, and are liable to the debts of the real owner. If then there be reason and policy for the support of the rule against the restraint of alienation at the common law, as is .conceded by the Court, in National Bank vs. Adams, 1 do not understand why the same reason and policy do not apply in the case of a transfer of property in trust. Nor is it a matter of much consolation to creditors to know that the cestui que trust takes the legal title to the accrued income of the estate from the moment it is paid over -to him, and that he is thereby enabled to put it in his pocket in open defiance of the demands of justice; though it be true, he is, from that moment, at liberty to dispose of it as he may think proper.

2. Rut suppose the law to be as contended for by the appellant,—that it is competent to a testator or the founder of a trust, by the use of apt terms, to exclude the power of alienation by the cestui que, trust for life, and all liability for his debts, the question then arises, has such restriction been effectually imposed in this case? As has been noticed, the only terms in the devise upon which reliance is placed for excluding the rights of the creditors, are those employed in the direction to the trustee, that, after certain deductions for necessary purposes of the farm, the net rents and profits shall he paid into the hands of the son, *106 “ and not into another, whether claiming by his authority or otherwise,” so long as the son shall live. The trustee is given no discretion, and the devise is to the son absolutely for life. According to all authority, the exclusion of the right of alienation, and the liability for debts, can only be effected, if at all, by the use of very clear and explicit terms. Here, the direction is only as to the mode of payment to the cestui que trust. I have found no well considered case, even in the case of married women, in regard to whom such restrictions may be imposed, where such terms as are here used, have been held to have such operation. In Brandon vs. Robinson, supra, Lord Eldon said, “the old way of expressing a trust for a married woman was, that the trustee should pay into her proper hands, and upon her own receipt only; yet this Court always said, she might dispose of that interest, and her assignee would take it; as if there was a contract, entitling the assignee, this Court would compel her'to give her own receipt, if that was necessary to enable him to receive it.” And certainly, if a cestui que trust can assign the interest, that interest can be made liable for his debts. The same principle is clearly stated by Judge Story, in 2 vol. Eq. Juris., secs. 1382a and 1383. And in the case of Acton vs. White, 1 Sim. & St., 429, it was held by Sir John Leach, V. C., that a devise to trustees for the separate use, with a direction to pay the rents, income, or interest, from time to time into the proper hands of the cestui que trust for life, (the wife of the devisor,) was not sufficient to impose the restriction, though the words, “ and not otherwise, and that the receipt of the cestui que trust alone for what shall be paid into her proper hands shall be sufficient discharge/' were added. The principle is settled that such restriction will not be implied from any ambiguous expressions, but must be declared in express terms, or be *107 deducible from words that admit of no doiijrt whatever. The words here are not free of ambiguity.

I am of opinion therefore, upon both grounds, that the fund was attachable for the debts of the cest-ui que trust; and under the facts agreed on, I can perceive no difficulty in rendering judgment of condemnation, according to the practice recognized in Early vs. Dorsett, Harris & Co., 45 Md., 462 . The judgment below, according to my view, ought to he reversed.

(Filed 12th June, 1888.)