Lamberton v. Pereles

23 L.R.A. 824, 58 N.W. 776, 87 Wis. 449, 1894 Wisc. LEXIS 204

• Court: Wisconsin Supreme Court
• Decided: April 10, 1894
• Status: Published

Opinion

Cassoday, J.

The will in question was admitted to probate by the county court of Milwaukee county. The estate has oeen fully and finally settled in that court. Nothing remains but for the trustees to execute the trust as directed by the will. The jurisdiction of that court, however, is expressly extended by statute “ to all cases of trusts created by will admitted to probate in such court.” Sec. 2443. But such jurisdiction of the county court is not made exclusive. It is to be remembered that the circuit courts have original jurisdiction in all matters, civil and criminal, within this state, not excepted in the constitution nor prohibited by law. Const. art. VII, sec. 8. Such judicial power is vested in such courts, “ both as to matters of law and equity.” Id. sec. 2. The trustees in charge of the estate were within the jurisdiction of the circuit court for Milwaukee county. The contention that that court did not have jurisdiction to prevent the diversion or dissipation of the income of the trust fund, or control the direction of its payment, is clearly untenable. There is no longer any particular reason in this case why such jurisdisdiction should be confined to the county court. The facts stated are sufficient to justify the circuit court in taking jurisdiction, Willis v. Fox, 25 Wis. 646; Catlin v. Wheeler, 49 Wis. 507; Hawley v. Tesch, 72 Wis. 299. The question presented is peculiarly one of general equitable cognizance. Thus, in Ewing v. Orr Ewing, L. R. 9 App. Cas. 40, 41, the testator was domiciled in Scotland, where the will was probated, and afterwards confirmed in England; and it was held that the court of chancery in England had jurisdiction to administer the trusts of the will. The Earl of Selbobnb, L. C., after declaring, in effect, that courts of equity in England are, and always have been, courts of conscience, operating in personam, and accustomed to compel the performance of contracts and trusts as to subjects not within their jurisdiction, and in speaking for the court, said: “ A jurisdiction against trustees which is not excluded rations legis rei sitae as to land, cannot be excluded as to movables because the author of the trust may have a foreign domicile; and for this purpose it makes no difference whether the trust is constituted inter vivos or by a will or mortis causa deed. Accordingly, it has always been the practice of the English courts of chancery to administer, as against executors and trustees personally subject to its jurisdiction, the whole personal estate of testators or intestates who have died domiciled abroad, by decrees like that now in question.” See 1 Perry, Trusts, §§ 70, 71. We must hold that the circuit court had jurisdiction.

The principal controversy is as to whether the written instrument executed by the plaintiff, and delivered to his wife, Gladys L. Lamberton, on or about November 1,1892, Avhereby he assigned and transferred to her the income of the trust fund in question, as mentioned, is valid. The validity of the trust is expressly conceded. The contention on the part of the plaintiff is, and it is said that the trial court held, that our statutes applicable ivere borrowed from New York, and that under these statutes, as construed in that state, the assignment is void. The sections particularly relied upon are 2083, 2089. One of these declares that: “ No person beneficially interested in a trust for the receipt of the rents and profits of lands, can assign or in any manner dispose of such interest; but the rights and interests of every person for Avhose benefit a trust for the payment of a sum in gross is created, are assignable.” Sec. 2089. The other declares that: “ When a trust is created to receive the rents and profits of lands, and no valid direction for accumulation is given, the surplus of such rents and profits beyond the sum that may be necessary for the education and support of the person for Avhose benefit the trust is created shall be liable in equity to the claims of the creditors of such person, in the same manner as other personal property which cannot be reached by an execution.” These sections are contained in the chapter of “Uses and Trusts,” found under the title “ Of Real Property and the Nature and Qualities of Estates Therein.” They were taken almost literally from secs. 57 and 63 of the article on “Uses and Trusts” in New York. 4 R. S. N. Y. (8th ed.) 2438, 2439. Until the recent amendments the same Avas true respecting secs. 2037-2039, R. S., relating to “imsted and contingent estates,” the “ suspension of poiver of alienation,” and the “limitation on power of suspending alienation.” 4 R. S. N. Y. 2432, secs. 13-15. These statutes relate expressly to real estate. They may possibly become applicable to the rents and profits of the farm mentioned, upon the death of the plaintiff’s mother. The assignability of such rents and profits of lands is not involved in this controversy. The controversy here is confined to the assignability of the income arising and to arise out of personal property held in trust as stated.

The New York statutes, unlike ours, in addition to the sections cited, also place an express limit on the power of the suspension of the ownership of personal property longer than two lives in being. 4 R. S. N. Y. 2516, sec. 1. This difference in the statutes of the two states has been repeatedly recognized by this court. De Wolf v. Lawson, 61 Wis. 414; Scott v. West, 63 Wis. 581, 582; Webster v. Morris, 66 Wis. 382. The same distinction has been observed by the supreme court of Minnesota, citing numerous New York cases. In re Tower's Estate, 49 Minn. 371. In addition to the statute so limiting the power of the suspension of the ownership of personal property, the New York statutes expressly declare that: “ In all other respects limitations of future or contingent interests in personal property shall be subject to the rules prescribed in the first chapter of this act in relation to future estates in lands.” 4 R. S. N. Y. 2516, sec. 2. That includes, not only uses and trusts, but the whole field of real property and the nature, qualities, and alienation of estates therein. The section last quoted is followed by others prescribing the manner in which “an accumulation of the interest of money, the produce of stock or other income or profits arising from personal property, may and may not be secured.” Id. secs. 3-5.

The question presented has elicited much discussion in New York. In speaking of these statutes in Graff v. Bonnett, 31 N. Y. 13, Hogeboom, J., said, in behalf of the court, that: “ It is undeniable that if this were an interest in a trust for the receipt of the rents and profits of lands it would not be assignable; and it has been held in several cases that the statute which provides that limitations of future or contingent interests in personal property shall be subject to the statutory rules prescribed in relation to future estates in land was, in effect, a legislative application of the same principles a,nd policy to both classes of 'property, and that, even if the provisions of the statute were not sufficiently comprehensive absolutely to require, as a peremptory injunction of statute law, their application in all their length and breadth and in the same degree to both classes of property, the argument to be derived from the general similarity of the legislative enactments in regard to both classes of property, from the similar, if not equal, mischiefs to be remedied, and from the general policy of the law, would authorize a court of equity, in the exercise of its acknowledged powers, to apply the same rule of construction to both.” The same is expressly sanctioned by Judge Weight, speaking for the whole court, in Campbell v. Foster, 35 N. Y. 371, 372. To a similar effect is Cook v. Lowry, 95 N. Y. 108. In Graff v. Bonnett, supra, Denio, C. J., dissented, and, after reviewing the prior decisions in that state, said: “ Hence, I conclude that there is nothing in our statute law which restrains the alienability of the interest of the beneficiary in a trust to receive and pay over the interest of money or of personal property.” 31 N. Y. 19.

Thus it appears that, notwithstanding the statutes of New York so making the statutes respecting real estate also applicable to personal property, yet the highest court of that state verj7 reluctantly reached the conclusions mentioned, and then only by a divided court. In this state we have no statute making the chapter on uses and trusts, or any part of it, applicable to personal property. This distinction was not observed by our late Brother Tayloe in Arzbacher v. Mayer, 53 Wis. 380; and the question here considered was not there involved. It would seem that the founder of a trust fund may secure the benefits of the same to the object of his bounty by providing that the income thereof shall not be alienable by anticipation, nor subject to be taken for his debts. Holdship v. Patterson, 7 Watts, 547; Rife v. Geyer, 59 Pa. St. 393; White v. White, 30 Vt. 338; Pope v. Elliott, 8 B. Mon. 60; Nichols v. Eaton, 91 U. S. 716; Broadway Nat. Bank v. Adams, 133 Mass. 170. This seems to be more unfavorable to the free as-signability of such income than the English cases. Brandon v. Robinson, 18 Ves. 429; Rochford v. Hackman, 9 Hare, 475; In re Dugdale (Dugdale v. Dugdale), L. R. 38 Ch. Div. 176. These cases make a distinction between a gift void on condition and an absolute gift coupled with a limitation upon the ordinary incidents of the property or income so given. But in the case at bar the founder of the trust has imposed no such condition and made no such restriction. On the contrary, lie has left the plaintiff free to receive the entire income during his life. Upon the death of the testator, and the admission of the will to probate, the equitable right to the income in question at once became vested in the plaintiff. Scott v. West, 63 Wis. 571-573. The trust in question is an active trust. Until the plaintiff parted with his right to the income, or the same became otherwise divested, he could enforce payment thereof as it became due. “The right to control the disposition of property is fundamental.” Dodson v. Ball, 60 Pa. St. 495; Sparhawk v. Cloon, 125 Mass. 266. Of course, such right may be regulated by law. But, as indicated, there are here no restraints upon such alienation, statutory or otherwise. When, as here, it is established that an interest in, or right to, the income of a trust fund is vested in the cestui que trust, the mode in which, or the time when, he is to reap the benefit is immaterial. 1 Perry, Trusts, § 386. The distinguished author there says: “The law does not allow property, whether legal or equitable, to be fettered by restraints upon alienation. Therefore, when an equitable interest is once vested in the cestui que trust, he may dispose of it, or it may pass to his assignees by operation of law if he becomes a bankrupt.” To the same effect, Sparhawk v. Cloon, supra; Forbes v. Lothrop, 137 Mass. 525; Sears v. Choate, 146 Mass. 395; Maynard v. Cleaves, 149 Mass. 307. In speaking of the English cases, Gray, C. J., in the first of these cases, said: “ Where the income of a trust estate is given to any person (other than a married woman) for life, the equitable estate for life is alienable by,- and liable in equity to the debts of, the cestui que trust, and this quality is so inseparable from the estate that no provision, however express, which does not operate as a cesser or limitation of the estate itself, can protect it from his debts.”

We must hold that the income arising from the personal property so held in trust was assignable. Under our statutes, we are satisfied that it was competent for the wife to take title or acquire the equitable right to such income from her husband, especially as it is-in the line of the bequest in the testator’s will, and made upon the agreement of the wife to properly care for, educate, and maintain each and both of the infant children of her and the plaintiff. Wheeler & W. Mfg. Co. v. Monahan, 63 Wis. 198; Gettelman v. Gitz, 78 Wis. 439; State v. Wallace, 67 Iowa, 77. We must hold that the written instrument in question was a valid assignment of the income of the personal property held in trust, which has accrued or may accrue during the life of the plaintiff.

By the Court.— The order of the circuit court is reversed, and the cause is remanded for further proceedings according to law.