Burns v. Miller, Hiersche, Martens & Hayward, P.C.

948 S.W.2d 317, 1997 Tex. App. LEXIS 2752, 1997 WL 275502
CourtCourt of Appeals of Texas
DecidedMay 27, 1997
Docket05-94-01288-CV
StatusPublished
Cited by64 cases

This text of 948 S.W.2d 317 (Burns v. Miller, Hiersche, Martens & Hayward, P.C.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burns v. Miller, Hiersche, Martens & Hayward, P.C., 948 S.W.2d 317, 1997 Tex. App. LEXIS 2752, 1997 WL 275502 (Tex. Ct. App. 1997).

Opinion

OPINION

KINKEADE, Justice.

Bobby H. Burns appeals a trial court order compelling him to turn over various property interests to a receiver, Milo H. Segner, who would apply the property to a judgment debt Burns owes the law firm of Miller, Hiersche, Martens & Hayward, P.C. Because the trial court’s order (1) compelled Burns to turn over exempt spendthrift trust property, (2) compelled Burns to turn over proceeds or disbursements of exempt spendthrift trust property, (3) compelled Burns to turn over property held by third parties without evidence that such property was subject to Burns’s possession or control, and (4) was not clear and concise and reached unidentified property without a showing of any present or future right of Burns to such property, we reverse the trial court’s order and remand this case.

FACTUAL AND PROCEDURAL BACKGROUND

On November 12, 1991, the trial court entered a judgment against Bobby H. Bums and in favor of Sherwood E. Blount, Jr. in the amount of $296,484.56. Blount, in turn, owed money to the law firm of Miller, Hiersche, Martens & Hayward, P.C. (“Miller Hiersche” or “the firm”). Miller Hiersche obtained a security interest in certain assets of Blount, including his judgment against Burns. In April 1993, Miller Hiersche foreclosed on that security interest and purchased Blount’s judgment against Bums at a foreclosure sale. Miller Hiersche received no payments on the Burns judgment and applied to the trial court to order Bums to turn over various property interests to satisfy the judgment. On July 18, 1994, the trial court granted Miller Hiersche’s application and signed a turnover order.

Bums appeals only the provisions of the turnover order that:

(1) compelled him to turn over four specified categories of property, including disbursements from spendthrift trusts;
(2) appointed a receiver to receive and distribute the property subject to the turnover order;
(3) compelled Bums to write letters to the trastees of the two trusts instructing them to make all future trust distributions to the receiver; and
(4) awarded Miller Hiersche attorneys’ fees of $1000.

*321 The trusts pertinent to this appeal are two trusts created in the wills of Burns’s parents. Bums is the sole beneficiary of the trusts, from which the trustees are authorized to make discretionary disbursements for Burns’s support and maintenance. Both trusts contain spendthrift clauses providing that Burns’s rights to income or principal from the trusts shall not be liable for any of his debts or subject to any type of alienation.

TURNOVER STATUTE

In eleven points of error, Bums contends the turnover order violates section 31.002 of the Texas Civil Practice and Remedies Code, known as the turnover statute. See Tex.Civ. PRAC. & Rem.Code Ann. § 31.002 (Vernon 1986 & Supp.1997). The turnover statute is a purely procedural device by which creditors may reach nonexempt assets of debtors that are otherwise difficult to attach or levy on by ordinary legal process. Tex.Civ.Prac. & Rem. Code Ann. § 31.002(a) (Vernon 1986); Beaumont Bank, N.A. v. Bullet, 806 S.W.2d 223, 224 (Tex.1991). Under the statute, a judgment creditor can apply to a court for an injunction or other means to satisfy a judgment debt through a judgment debtor’s property, including present or future property rights. Tex.Civ.Prao. & Rem.Code Ann. § 31.002(a) (Vernon 1986). The court may order the judgment debtor to turn over property in the debtor’s possession or control to a sheriff and may also appoint a receiver to take possession of the property. Id. § 31.002(b).

SPENDTHRIFT TRUSTS

A spendthrift provision in a trust generally prohibits a beneficiary from anticipating or assigning his interests in the trust. Dierschke v. Central Nat’l Branch of First Nat’l Bank at Lubbock, 876 S.W.2d 377, 380 (Tex.App.-Austin 1994, no writ). Spendthrift tmsts protect the beneficiary’s interest in the trust corpus and income from claims of a beneficiary’s creditors while the corpus and income remain in the trust and are held by the trustee. Id. Texas courts have long upheld and enforced spendthrift provisions, justifying this restraint on alienation not out of consideration for the beneficiary, but rather for the right of the donor creating the trust to control his gift. See Caples v. Buell, 243 S.W. 1066, 1067 (Tex.Com.App.1922); Hines v. Sands, 312 S.W.2d 275, 279 (Tex.Civ.App.-Fort Worth 1958, no writ). The trust code also specifically protects the right of a trust settlor to include a spendthrift provision that prohibits the income and/or principal interest of a beneficiary from being transferred before payment or delivery of the interest to the beneficiary. Tex.Trust Code Ann. § 112.035 (Vernon 1995). (We note that a beneficiary’s interest in a spendthrift trust may be reached for child support obligations. See Tex.Fam.Code Ann. § 154.005 (Vernon 1996).)

THE TURNOVER ORDER

The trial court’s order compelled Bums to turn over several categories of property. Burns challenges four of those categories in this appeal. We interpret Burns’s brief to include a challenge of all four categories under each of the first five points of error. We review the law relating to the first five points of error and then address those points of error together for each of the four categories of property that Bums challenges.

Exempt Property

We review turnover orders under an abuse of discretion standard. Beaumont Bank, 806 S.W.2d at 226. In his first point of error, Bums argues the trial court abused its discretion by ordering the turnover of exempt property, that is, trust fund assets in the hands of the trustees before they are distributed to Bums or for the benefit of Burns. The turnover statute provides that a trial court cannot order the turnover of property that is “exempt” from attachment, execution, or seizure. Tex.Civ.Prac. & Rem. Code Ann. § 31.002(a)(2) (Vernon 1986).

Miller Hiersche acknowledges that section 112.035 of the trust code protects assets in spendthrift tmsts. See Tex.Trust Code Ann. § 112.035(a) (Vernon 1995). However, the firm contends that section 112.035 does not make spendthrift tmst assets “exempt” as that term is used in the turnover statute. It argues that property is considered exempt under the turnover stat *322 ute only if the legislature described the property using the words “exempt from attachment, execution, or garnishment” in a relevant statute. We disagree. The trust code does not use the language Miller Hiersche contends is necessary to create an exemption.

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Bluebook (online)
948 S.W.2d 317, 1997 Tex. App. LEXIS 2752, 1997 WL 275502, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burns-v-miller-hiersche-martens-hayward-pc-texapp-1997.