Reasons for and against the validity of prohibition of in Forfeiture for Voluntary Alienation 237. A clause of forfeiture upon the voluntary alienation of a legal absolute interest is generally void. There is no 1 See Chap. 9, ante. reason why the law should be different in equity. No Pennsylvania case of such a clause of forfeiture upon an absolute equitable estate has been found. In the absence, however, of any authority to the contrary, the principle in equity may be said to be the same as that which obtains at law. Preliminary Discussion as to Prohibition of the Voluntary 238. In like manner, the law relating to a clause of prohibition on the voluntary alienation of an equitable absolute interest should be the same as that which prevails at law. There are, however, several recent cases in which the question has come before the court, and which require examination before any conclusion can be drawn as to the law. These cases will now be discussed. Barker's Estate 239. In Barker's Estate3 a testatrix appointed her husband her executor with power to take charge of her estate, real and personal, and dispose of it in his discretion, subject to the restrictions and conditions of her will, paying incumbrances and dividing the balance among the children; such distribution not to take place till the husband's death; until then, the income, or so much thereof as he might desire, to be applied to the support of himself and of such members of his family as might, in his discretion, require it. On any child becoming of age, the husband was authorized, if he deemed it expedient, to bestow on such child the portion of the estate which it would inherit on the husband's death. The testatrix also declared that if, in such bestowal, the husband should exceed the share which would otherwise have fallen to any child, he should not be liable to account to the other children. And she added, "It is my will in creating the foregoing trust for the maintenance and support of my husband and family that the same shall be enjoyed by him and them without being in any way subject to or liable for the debts or engagements of my said husband or any of our children." A son of the testatrix who had reached twenty-one, made an assignment for the benefit of his creditors, and the husband after 2 See Chap. 9, ante. 3 159 Pa. 518 (1894). 5 ward advanced to this son a portion of his share. The husband filed his account as executor, and the assignee of the son claimed the amount which had been paid to the son after the assignment. The Orphans' Court disallowed the claim of the assignee of the son. This case is very badly reported, and it is not surprising that Mr. Gray failed to understand why the two women, Anna B. Scott and Deborah Mellor, appealed. It appears from an an examination of the record that the assignee of the son did not appeal. The two women who appealed objected to certain items in the account relating to investments. The question, then, as to the propriety of the advancement to the son was not before the Supreme Court. The case, therefore, is deprived of much of its force on this point, as it is only a decision of the Orphans' Court. The criticism by Mr. Gray on the case is given in full in the note, and leaves little to be added. 4 The above statement is, with a slight alteration, taken from Gray, Restraints on Alienation, 2 ed. (1895), §124h. 5 Restraints on Alien., 2 ed. (1895), §124h. 6 Restraints on Alien., 2 ed. (1895), §124i, et seq. "In the Orphans' Court the auditing judge ruled that the children took vested interests when they reached twenty-one, but that the husband 'had the right to bestow upon any of the children a sum greater or less than their respective shares. If he chose to exercise that option by giving to the children, other than the bankrupt, a sum so far in excess of their portions as should leave nothing to the debtor, the creditors would be powerless.' The Orphans' Court affirmed the decision of the auditing judge. They said: 'Where there is a present gift, in possession, of the entire beneficial ownership, a trust to protect against creditors is invalid: Keyser's Appeal, 57 Pa. 236; but the power of alienation may, unquestionably, be withheld in the case of a contingent interest before it vests, even in England: Large's Case, 2 Leon. 82; 3 Leon. 182; Barnett v. Blake, 2 The auditing judge, Ashman, Dr. & Sm. 177; and so it would seem in Pennsylvania in case of a vested interest, prior to its coming into possession, or where the restraint is confined to a limited period not transgressing the rule against perpetuities: McWilliams v. Nisly, 2 S. & R. 507, 513. See also Jauretche v. Proctor, 48 Pa. 472.' The Court refers also to Beck's Estate and Goe's Estate, ubi supra. The Supreme Court affirmed the decision, saying that they did so on the reasons given in the opinion of the auditing judge. It does not seem entirely clear that the son did not have a legal interest, but assuming that he had only an equitable interest the ruling of the auditing judge appears to amount to this. If A. having an equitable vested interest in remainder in a trust fund after a life interest given to the trustee, assigns that interest, and the trustee waives his life estate and is ready to pay over A.'s interest at once, the trustee can ignore the assignment and pay the money directly to A., provided he has power to appoint the fund away from A. This is the reasoning approved by the Supreme Court, but it seems open to some criticism. Sup J.,' placed the decision on the ground that as the trustee had discretion to give the principal among the children in such shares as he saw fit, he might distribute it to the others to the exclusion of the son; that, therefore, the son would have no standing to compel the exercise of the discretion in his favor. As he, therefore, had nothing to assign, his assignee would take nothing. In no event could the trustee be surcharged for payment after the assignment unless he had notice thereof, and as it does not appear that he had such notice, the case would appear to be well decided on this ground alone. Unfortunately the court in banc, in dismissing the exceptions, placed the decision on other grounds. Penrose, J., delivered the opinion of the court, and said that the clause against involuntary alienation applied to the share of the son in the principal, and prevented voluntary alienation for payment of debts.10 The learned judge seemed to proceed on the theory that a restraint 9 pose the trustee had died, and his successor is dividing the property, and has notice that A. has assigned his share, he would surely have to pay it to the assignee, and what difference can it make that the life tenant waives his interest, and allows the vested interest in remainder to come into possession at once? And again, what difference can it make that the vested interest could have been divested by the exercise of a power if the power has not been exercised? The full bench of the Orphans' Court places the decision on another ground, viz.: that a future interest though vested, can be put under a restraint against alienation if it has not come into possession; but this ground seems no more tenable than that taken by the auditing judge. It is doubtless true that a future contingent interest may be forfeited by alienation before vesting, $46, ante; but that is a totally different proposition from saying that a contingent future interest shall not be assignable before vesting. Law and equity have always lent themselves to the easy destruction of contingent interests, but that is very different from watching 1 on alienation qualified as to time was valid at law; that Goe's Estate decided that such a restraint on alienation was valid for a limited period, that is, while the legacy was in the hands of the executor, and that, therefore, a restraint on the voluntary alienation of a future vested equitable interest is valid during the continuance of the trust. A restraint on alienation qualified as to time is probably void at law 2 and there seems to be no good reason for extending the doubt into equity. The learned judge failed to observe, however, that the clause in the case at bar restrained only involuntary alienation, and that the case before him was that of a voluntary alienation, and that in Goe's Estate the court awarded the fund to the assignee as against the attaching creditor. Barker's Estate, therefore, seems to be inconsistent with the real decision in Goe's Estate. The learned judge got around this point by saying that an assignment for the payment of debts was the same as the taking of the estate by execution for the debt. It is submitted, however, that this is a confusion of the two kinds of alienation. They should be kept separate and distinct, and the one does not include the other." 3 Hartman's Estate 5 240. In Hartman's Estate the cestui que trust had been sent to jail for failure to support his wife. He then made an assignment of his interest to his wife, and she endorsed thereon an acceptance thereof and a consent to an order of discharge, which order was accordingly made. On the audit of the executor's account, the assignment to the wife was presented, and the order of the court below directing the payment to her was, on appeal, reversed by the Superior Court. The clause was against both voluntary and involuntary alienation. The opinion of the court turned on the character of the claim for which the assignment was made, and the decision was 1146 Pa. 431 (1892), §223, ante, and Beck's Est., 133 Pa. 51 (1890), §222, ante. 2 See $204, ante. 3146 Pa. 431 (1892), §223, ante. 4 See $173, ante, as to distinction between voluntary and involuntary alienation. 531 Super. Ct. 152 (1906). The words of the will, unfortunately, are not given in full, and it is somewhat difficult to tell whether the interest was legal or equitable. It is considered as equitable, as Beaver, J., in the Superior Court, at p. 154, expressly said that an active trust was clearly created, and the learned judge probably had before him the exact words of the will. |