Duvall v. McGee

826 A.2d 416, 375 Md. 476, 2003 Md. LEXIS 329
CourtCourt of Appeals of Maryland
DecidedJune 16, 2003
Docket39, Sept. Term, 2002
StatusPublished
Cited by3 cases

This text of 826 A.2d 416 (Duvall v. McGee) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Duvall v. McGee, 826 A.2d 416, 375 Md. 476, 2003 Md. LEXIS 329 (Md. 2003).

Opinions

BELL, Chief Judge.

The issue presented for resolution by this case is whether a tort judgment may be satisfied by invading the principal of a spendthrift trust held for the benefit of the tortfeasor. The Circuit Court for Anne Arundel County, recognizing that Maryland law only allows invasion of a spendthrift trust by a narrow class of creditors, and, only in limited circumstances, declined to expand the class or the circumstances. It opined that to hold that tort judgment creditors are among the class of creditors that have traditionally been allowed to invade a spendthrift trust in satisfaction of a judgment, would be to “rewrite” Maryland law. Such a revision of Maryland law, it pointed out, is properly addressed by the Maryland General Assembly or this Court. We shall affirm the judgment of the Circuit Court.

I.

James Calvert McGee (“McGee”), one of the appellees in the case sub judice, was convicted of felony-murder for his participation in a robbery that resulted in the killing of Katherine Ryon.1 Robert Ryon Duvall, the appellant, is the Personal Representative of the Estate of Katherine Ryon. He brought suit, in that capacity, in the Circuit Court for Anne Arundel County against McGee, seeking both compensatory [478]*478and punitive damages, plus costs of the suit,2 for the battery of Katherine Ryon and the conversion of her personal property. The parties settled this action, negotiating and executing an Agreement for Entry of Judgment/Partial Release of Claims (“Settlement Agreement”), pursuant to which, in satisfaction of the conversion count, the parties agreed to the entry of judgment against McGee, and in favor of the appellant, for $100,000.00 in compensatory damages and $500,000.00 in punitive damages.3 The Settlement Agreement acknowledged that McGee is the beneficiary of a trust established by his deceased mother, which, at the time of the settlement, was valued at approximately $877,000.00, exclusive of early withdrawal penalties and taxes. Under the terms of the trust, periodic monetary payments are to be made to McGee, and to others on his behalf, by Frank B. Walsh, Jr., the Trustee of the trust (“the Trustee),” the other appellee in the case sub judice. Another provision of the trust established what is commonly referred to as a “Spendthrift” Trust.4 That provision prohibited McGee from alienating the trust principal (“corpus”) or any [479]*479portion of the income from the trust while in the hands of the Trustee, and specifically shielded both the corpus and the income from claims of McGee’s creditors. The trust instrument also gives broad discretion to the Trustee to terminate the Trust at any time and pay the trust assets and any undistributed income to McGee or to any of the remaindermen to which the trust referred.5 The Settlement Agreement also provided that:

[480]*480“The [appellant] hereby forever releases, waives, relinquishes and abandons any rights he may have to satisfy or have paid any portion of the above-mentioned judgment by way of attachment, garnishment or any other post-judgment collection efforts directed against any periodic payments made by the Trustee of the Trust to [McGee] as the beneficiary of the Trust, or directed against any periodic payment made to any other person or entities for the benefit of [McGee]. The amount of any periodic payments which are immune to such post judgment collection efforts hereunder shall not exceed the amount of the periodic payment previously made during the preceding three (3) years, exclusive of payments made for legal fees. The parties understand and specifically agree that the Trustee will continue to pay the legal fees on behalf of [McGee] and such payment of legal fees shall be immune to any post-judgment collection efforts as outlined above. [McGee] agrees that he shall provide an annual accounting in August of each year beginning in the year 2002 outlining the periodic payments received by him or made to others on his behalf (exclusive of legal fees) during the preceding year.”

Thus, it prohibited the appellant from attaching or garnishing any of the periodic payments the Trustee made to McGee from the Trust.

Having surrendered all rights to attach McGee’s periodic payment from the Trust, but armed with the judgment entered pursuant to the Settlement Agreement, the appellant sought to satisfy the judgment by invading the corpus of the [481]*481trust. Thus, the appellant served a Writ of Garnishment on the Trustee. Answering the Writ, the Trustee defended on the grounds that the trust was a spendthrift trust; the Trustee was not indebted to McGee; and the Trustee was not in possession of any property belonging to McGee.

Both parties moved for summary judgment. Although acknowledging that this Court, in Smith v. Towers, 69 Md. 77, 14 A. 497 (1888), upheld the validity of spendthrift trusts in Maryland and, thus, prohibited their invasion for the payment of debt, the appellant maintained that, over time, this Court has carved out, on public policy grounds, exceptions to the spendthrift doctrine, pursuant to which some classes of persons are permitted to invade spendthrift trusts. Noting one of the rationales of the Smith decision — that because “[a]ll deeds and wills and other instruments by which [spendthrift] trusts are created are required by law to be recorded in the public offices ... creditors have notice of the terms and conditions on which the beneficiary is entitled to the income of the property,” 69 Md. at 89, 14 A. at 499 — the appellant argued that tort-judgment creditors should be included among those excepted, since such creditors had no opportunity to investigate the credit-worthiness of the tortfeasor prior to suffering from the tortious conduct giving rise to the claim. Furthermore, the appellant continued, the public policy of this State dictates that tort-judgment creditors be deemed a special class of creditors entitled to invade a spendthrift trust.

The trial court held:

“Maryland law is what governs this case, however, and Maryland law is clear. A spendthrift trust may not be reached in order to satisfy the judgment in the case sub judice. Although the facts involving the murder of the late Ms. Ryon, and the further facts relating to the beneficiary status of the Defendant McGee, a felony murderer, are very tempting, this Court may not rewrite the law; the Maryland Legislature has the responsibility of that task, or the Appellate Courts of this State must further interpret the law.... This Court has a responsibility to apply and uphold the laws [482]*482of the state as its interprets they now exist, not create new law.”

Thus, the appellant’s motion for summary judgment was denied and the appellees’ cross-motion, granted. The appellant noted a timely appeal to the Court of Special Appeals. This Court, on its own initiative, issued the writ of certiorari to address this novel issue of Maryland law, prior to any proceedings in the intermediate court. Duvall v. McGee, 369 Md. 570, 801 A.2d 1031 (2002).

In this Court, the appellant argues that the public policy of this State favors a rule allowing a tort-judgment creditor’s claim to be satisfied by invading the corpus of a spendthrift trust.

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Related

Young v. McCoy
54 Cal. Rptr. 3d 847 (California Court of Appeal, 2007)
Harvey v. Marshall
884 A.2d 1171 (Court of Appeals of Maryland, 2005)
Duvall v. McGee
826 A.2d 416 (Court of Appeals of Maryland, 2003)

Cite This Page — Counsel Stack

Bluebook (online)
826 A.2d 416, 375 Md. 476, 2003 Md. LEXIS 329, Counsel Stack Legal Research, https://law.counselstack.com/opinion/duvall-v-mcgee-md-2003.