Honnett v. Williams

49 S.W. 495, 66 Ark. 148, 1899 Ark. LEXIS 66

• Court: Supreme Court of Arkansas
• Decided: January 28, 1899
• Status: Published

Opinion

Riddick, J.,

(after stating the facts.) This is an action to foreclose a mortgage. The main question presented for our consideration is whether the mortgagors had power to execute a valid mortgage upon the lands mortgaged. The land in question was owned by Willoughby Williams, Sr., who conveyed it to his son, Willoughby Williams, Jr., and Anna H. Williams, the wife of his son, in trust for their children, “free from the debts or liabilities” of the said Willoughby Williams, Jr., and Anna H. Williams, “or their control, farther than the use and appropriation of the rents and profits of said lands for the’ sustenance of themselves and the support, education and maintenance of the children aforesaid.” Four of the children and their mother, Anna Williams, joined in the execution of the mortgage to appellants. If they owned a vested interest in the land, they could mortgage it; for the general rule is that the beneficial interest of the cestui que trust in land may be sold and conveyed as other interests in property, legal or equitable. Speaking of this question, Mr. Pomeroy says that, “with the exception in reference to married women, the estate of the cestui que trust cannot, by any restrictions annexed to the trust, be rendered inalienable, nor can it be stripped of the other incidental rights of ownership. It is also liable for the debts of the beneficiary. It cannot be so created that, while it is subsisting, and enjoyed by the beneficiary, it shall be absolutely free from such liability. The trust may be so limited that it shall not take effect unless the beneficiary is free from debt, or that his estate shall cease upon his becoming insolvent, or upon a judgment being recovered against him, and shall thereupon vest in another person; but the cestui que trust cannot hold and enjoy his interest entirely free from the claims of creditors.” 2 Pomeroy’s Equity, § 989; Mebane v. Mebane, 4 Rich. Eq. 131; S. C. 44 Am. Dec. 102; Heath v. Bishop, 4 Rich. Eq. 46; S. C. 55 Am. Dec. 654; Brandon v. Robinson, 18 Vesey (Eng.), 429.

While the rule, as thus announced by the learned author, is the settled law of England, and is followed in some of our states, it has been repudiated by the courts of other states, and also, it seems, by the supreme court of the United States.

* These latter courts uphold what are sometimes called spendthrift trusts, which restrain the power of the cestui que trust to alien or incumber the trust property. But, while the rule in favor of spendthrift trusts has now the sanction of many learned courts, it has been condemned by certain text-writers as an innovation that has added nothing of. value to the jurisprudence of those states that have adopted it. Gray, Restraints on Alienation; Wait, Fraud. Conv. §§ 364-5. The question as to the validity of such trusts has never been decided by this court, but, so far as it has been alluded to, the intimations seem to favor the old rule that, if property, either legal or equitable, be vested in one, it becomes liable to the incidents of property, and capable of being sold or conveyed by the owner, or seized for his debts, —subject, of course, to such protection as may be granted by homestead and exemption laws. Lindsay v. Harrison, 8 Ark. 302; Phillips v. Grayson, 23 ib. 769.

We are not required to decide the question in this case, for no restraints appear to have been placed by the deed under consideration upon the cestuis que trust in the matter of alienating the trust property. If, therefore, they had at the time of the mortgage any vested interests in this property under the trust deed of Willoughby Williams, Sr., there is nothing that restrains them from mortgaging the same.

At the time the mortgage which appellants ask to foreclose was executed, Willoughby Williams, Jr., was dead, and there was no possibility of further issue to the marriage of himself and Anna Williams. The beneficiaries under the deed of trust of Willoughby Williams, Sr., were determined, and each of the children of said Willoughby and Anna Williams had in equity a vésted estate in fee simple in said lands, subject to the right of their mother, Mrs. Anna Williams, to a support out of the rents and profits of the same during her life. After they all become of age, the five children will, under the terms of the trust deed, be each entitled to a fifth share of the rents and profits of the estate conveyed by such deed, subject to the right of their mother to a sustenance out of same. The children are now all of age, except John N. Williams. He did not join in the mortgage, and we are of the opinion that the trustee had no power to mortgage his interests, and that he is not affected by such mortgage. He is entitled, not only to a support and maintenance, but also to be educated out of the income from the trust estate. Until he arrives of age, he should have set apart for him, out of the rents and profits of the estate, an amount equal to that of the adult beneficiaries, and even greater if necessary to maintain and educate him. As to Mrs. Anna Williams, the land was conveyed to her and her husband for “the sole and separate use, benefit and behoof” of the children. If she had a beneficial interest in the land under this deed, it was a legal, and not an equitable, interest, and could be conveyed; but we are not certain that she had any interest that could have been mortgaged, had the children not joined in the deed; for her right to a sustenance out of the income seems to have been intended, not as an interest in the land, but as an emolument connected with her office of trustee. But she could join with any child in a conveyance, and thus release the share of such child from any charge for her support. Four of the five children joined with her in the execution of the mortgage under consideration, and we are of the opinion that the mortgagees have the right to foreclose such mortgage, and that the purchasers at such. foreclosure sale will take the shares- of such children freed from any charge for her sustenance; and this interest in the land, according to admissions of counsel for appellant, is more than sufficient to satisfy the mortgage debt.

We are also of the opinion that the personal judgment rendered against appellees is sustained by the evidence, though, in view-of our conclusion that the mortgage is valid, we suppose that this is now a matter of small importance, as the mortgaged property is worth more than the debt.

We concur in the ruling of the chancery court on the question of interest. The mortgage'does not, as counsel for appellant contend, provide that the account shall bear interest at the rate of ten per cent., but only that the items of money advanced shall bear such interest. Now these items of money constitute only a small portion of the account, and the amount of the money advanced is not set out in the complaint, nor separated in any way from the other items of the account. The fact that small sums of money were advanced furnished no reason why the whole account should bear interest at the rate of ten per cent, after maturity; and, as the amount of such items of money was not set out in the complaint, the court was not called on to distinguish these money items from other items in the account. The judgment as to the debt and interest is affirmed, but the judgment that the mortgage was invalid is reversed, with an order that a decree foreclosing said mortgage be entered in accordance with this opinion.

Nichols v. Eaton, 91 U. S. 716, and Gray, Restraints on Alienation, where the English and American cases are collected and ably discussed. .