the will which referred to future debts, and further, that the claim at bar was incurred after the death of the testator who created the trust. The case is distinguished on the ground of the special provisions of the will by Mr. Justice Potter, in the case of Board of Charities v. Lockard. It may therefore be considered as being in entire conformity with the current of authority above noted. Claim Does Not Protect the Estate in the Hands of the Cestui Que Trust 284. All these proceedings were against the trustee attempting to reach the sum in his hands due the beneficiary. It may not seem unnecessary, however, to point out, as was done by Mr. Justice Mercur,10 that where the proceedings are against the beneficiary to collect the debt out of money in his hands, a different question is presented, as for instance, an attachment of bank account in which the cestui que trust has deposited the money received from the trustee. That the creditor could succeed in such case is beyond dispute. As to the Extent of the Protection as to Previously Incurred Obligations 285. Will words exempting the interest from debts which the cestui que trust may contract, protect from involuntary alienation for obligations incurred before the date of the settlement? The law is not clear. In Mehaffey's Estate " the words of the trust as to which the controversy arose were: "without any liability for any debts, contracts or engagements which they may make." The cestui que trust gave an order on the trustee to pay a certain sum to a creditor for a debt contracted before the death of the testator. The court below said that the force of the words "may make" was to exempt the interest only from debts contracted after the death of the testator. Therefore, the order was valid, as it operated as an assignment, and the creditor was entitled to recover from the trustee the amount of the order. On appeal, the Supreme Court reversed, saying that although this might be a proper 9 198 Pa. 572 at 574 (1901). at 155 (1882). 11 139 Pa. 276 (1890). construction of the trust, yet as the right of the creditor was founded on the order, to the making of which order the cestui que trust was incapacitated, the creditor could not recover, the order being made after the death of the testator. No statement as to the law can be made in view of the authorities. It is submitted that it is open to the Supreme Court to decide that words of future exemption do not protect from obligations incurred before the interest vests, and that such a decision would be in conformity with the policy of strictly construing the clause prohibiting involuntary alienation. As to Effect of Clause Against Involuntary Alienation on Assets Appointed by Life Tenant Under a General Power 3 286. Since a power of appointment does not enlarge a life estate to a fee, and the donee under the power is considered as taking under the original instrument, it follows that the creditors of the donee can have no claim at law against the assets appointed under the power. The donee of a general power may, of course, appoint to his creditors. In some jurisdictions the creditors of the donee may in equity come in on the assets notwithstanding an appointment to some one else. This result is reached on the principle that as the donee has practically all the powers of an owner in fee, the chancellor will compel him, if he exercises the power at all, to first appoint, to his creditors, and as equity will consider that as done which ought to be done, the creditors will be allowed to come in in all cases of appointment. The law in Pennsylvania has been understood to be that the creditors have no claim on the 1 See also remarks of the court below in Decker v. Directors of the Poor, 120 Pa. 272 at 274 (1888). See $283, ante, to the same effect. This difficulty arises from the unscientific form of the prohibition which has been generally adopted. The point is involuntary alienation. The obligation incurred cannot affect the interest of the cestui que trust until it has been reduced to judgment and execution issued. The common notion seems to be that the interest is free from debts, obligations, etc., and the clause is worded accordingly. If the nature of the debt is immaterial, why is not the time when it was incurred immaterial? 2 Bell's Est., 15 Phila. 589 (1882), s. c. 39 L. I. 430. See $389, post, on the application of the rule against perpetuities to powers of appointment. 3 As to what constitutes such an appointment, see Stokes's Est., 3 Pa. C. C. 193 (1887), s. c. 18 Phila. 175; Horner's Est., 4 Pa. C. C. 189 (1887), s. c. 3 Montg. Co. 155 (sub. nom. Spencer's Account), 3 Del. Co. 341; Fell's Est., 14 D. R. 327 (1905); Kensel's Est., 21 Montg. Co., 67 (1905); Fisher's Est., 16 D. R. 151 (1907). assets, although no case has been found deciding the point.* In a number of cases where there was a clause against involuntary alienation, it was held that the creditors of the life tenant could not come in on the assets appointed under a general power.5 If it is the law that the creditors cannot come in anyhow, then the clause against involuntary alienation is a superfluity. If they can, the clause under the cases cited prevents the creditors' claims from attaching. In any event, no matter which view is adopted, it may be said to be the settled law that the clause against involuntary alienation prevents the creditors of the life tenant from coming in on the assets appointed under a general power. It is submitted, however, that these cases are unsound; that the clause only applies to the life estate, that it is a severe stretch to extend it to the principal, and that such extension is practically the same as saying that the clause is valid when attached to an absolute interest. As to Accumulated Income Due the Cestui Que Trust at the Time of His Death 287. Where the cestui que trust dies and there is income accumulated in the hands of the trustee which has not been paid over, does the clause against involuntary alienation prevent the trustee from paying those accumulations to the personal representatives of the deceased cestui que trust? It was said in two early cases that the personal representatives of a cestui que trust, upon whose interest the restraint against alienation has been imposed, could not recover from the hands of the trustee, the accumulated income which the cestui que trust would have received, if living. To permit them to receive the income, it was said, would subject it to the claims of the cestui que trust's creditors." In a recent case the court reached a differ The cases are not clear, and the point appears to be open on the authorities: Morris v. Phaler, 1 Watts, 389 (1833), dictum Gibson, C. J., at 391; dictum Gibson, C. J., in Commonwealth v. Duffield, 12 Pa. 277 at 279 (1849); see argument of the late Mr. McMurtrie in Swaby's App., 14 W. N. C. 553 (1884). 5 Swaby's App., 14 W. N. C. 553 (1884). Point not decided in Mackason's App., 42 Pa. 330 (1862), although so argued in Ghormley v. Smith, 139 Pa. 584 (1891). Dunglison's Est., 201 Pa. 592 (1902). As to Fleming's Est., 219 Pa. 422 (1908), see §241, ante. 6 Horwitz v. Norris, 49 Pa. 213 (1865); Huber's App., 80 Pa. 348 (1876). "The income was committed to the disposal of the trustees, to be applied to his maintenance, support and benefit, and they were to exclude his creditors. * * * He owned nothing which he could dis 7 ent conclusion, although the point was not argued. The latter view seems to be the better. If the income is paid to the cestui que trust in his lifetime, it becomes subject to the claims of his creditors in his own hands. Why, then, should there be any difference when the income is paid to his personal representatives after his decease? The fact that, in one case, the creditors are not likely to get anything, and that in the other, the executors cannot get away with the assets, being under the necessity of filing an account, has no logical bearing on the principle involved. Furthermore, to permit the trustees to retain the income, involves to that extent an accumulation of income which is directly within the provisions of the Act of April 18, 1853.8 This does not seem to have been called to the attention of the court in the earlier cases. Furthermore, to whom is the accumulated income to be paid? The trust makes no provision for this addition to principal, and the court would have difficulty in ascertaining who should receive the amount. The question seems to be open on the cases, as there was no argument of the point in Seitzinger's Estate." Accrued Income 288. The cases do not touch the question of accrued income. There should, however, be no distinction on principle between accrued income and accumulated income.10 Effect of the Clause as Between Trustee and Cestui Que Trust 289. It is the duty of the trustee to see that the terms of the trust are observed, and since the clause is imposed for the benefit of the cestui que trust, it follows that the trustee is responsible, if he permits the cestui que trust to circumvent the clause. The trustee cannot, when there is a clause against pose of by will, as owner. And as he Pa. 500 discussed There the income due the cestui que trust had been wrongfully withheld by the trustee, and it was decided that the part so withheld could be paid to her personal representatives. Point not noticed in the syllabus. See Walters's Est., 223 Pa. 598 (1909) accord. 8 The statute against accumulations, for discussion of which see Chap. 25. 9170 Pa. 500 (1895). 10 See remarks of Strong, J., §287, n. 6, ante. 1 involuntary alienation, seek refuge in the connivance of the cestui que trust when the terms of the trust have been violated. No cases have been found in Pennsylvania raising this point. In two cases there are dicta lending countenance to the view that the acquiescence of the cestui que trust will relieve the trustee from liability. While this principle carried out might furnish a means of ridding the state almost entirely of the doctrine of spendthrift trusts, it is submitted that it is inconsistent with the entire theory of equity which obtains when a cestui que trust is under disability, whether natural or imposed by the terms of the trust.2 Mr. Gray's Explanation of the Origin of Spendthrift Trusts 291. Spendthrift trusts appear to have made their first appearance in the state of Pennsylvania, and it is a matter of some interest to ascertain, if possible, the exact origin of this extraordinary doctrine. Mr. Gray3 gives the following account of the origin of these trusts. As there were formerly no courts of equity in Pennsylvania there was no way to enforce equitable rights, and in order to give such a remedy, many equitable rights were turned into legal rights. This was done in two ways, (1) by extending the operation of the statute of uses to a use of personal property, (2) by considering as executed trusts which elsewhere would be considered as active and without the statute of uses.5 That equitable rights in land could be taken on execution by legal process, but when spendthrift trusts made their appearance, the court hesitated to permit the taking of the complicated interests of the cestui que trust under a legal process, and when equity jurisdiction was finally established the hold of spendthrift trusts was too strong to be shaken off. This explanation of the learned author, however, it is submitted, begs the question. Why should the court hesitate to extend the execution to the case of a spendthrift trust any more. than to the case of an ordinary trust, and that executions are permitted as to ordinary trusts is beyond dispute. This 1 Clemens' Est., 175 Pa. 110 (1896), stated $317, post, and Jones's Est., 199 Pa. 143 (1901), stated §318, post. 2 See §597, post, as to acquiescence of trustee in the violation of the clause against anticipation. 3 Restraints on Alien., 2 ed. (1895), $214, et seq. 4 This statement is open to question. See $123, ante. 5 See this point discussed, §§132, 133, ante. |