This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
93. Huntington v. Jones, 72 Conn. 45, 43 Atl. 564; Wagner v. Wagner, 244 111. 101, 18 Ann. Cas. 490, 91 N. E. 66; Jackson Square Loan etc. Ass'n v. Bart-lett, 95 Md. 661, 93 Am. St. Rep. 416, 53 Atl. 426; Nickerson v. Van Horn, 181 Mass. 562, 64 N. E. 204; Leigh v. Harrison, 69 Miss. 923, 18 L. R. A. 11 So. 604; Winslow v. Rutherford, 59 Ore. 124, 114 Pac. 930; Winthrop Co. v. Clinton, 196 Pa. 472. 79 Am. St. Rep. 729, 46 Atl. 435.
94. Roberts v. Stevens, 84 Me. 325, 17 L. R. A. 266. 24 Atl. 873; Baker v. Brown, 146;. Mass. 369, 15 N. E. 783; Berry v. Dunham. 202 Mass. 133, 88 N. E. 904; Mat-tison v. Mattison, 53 Ore. 254, 133 Am. St. Rep. 829, 18 Ann. Cas. 218, 100 Pac. 4; Barnes v.
Dow, 59 Vt. 530, 10 Atl. 258; Hoffman v. Beltzhoover, 71 W. Va. 72. 76 S. E. 968.
95. Bennett v. Bennett, 217 111. 434, 4 L. R. A. N. S. 470, 75 N. E. 339; Wallace v. Foxwell, 250 111. 616, 50 L. R. A. (N. S.) 632, 95 N. E. 985; Stambaugh v. Stambaugh, 135 Pa. 585, 19 Atl. 1058; In re Siegewarth's Estate, 226 Pa. St. 591, 134 Am. St. Rep. 1086, 75 Atl. 842; Stansel v. Hahn, 96 Miss. 616, 50 So. 696; Castree v. Shotwell, 73 N. J. Eq. 590, 68 Atl.-774.
96. Wenzel v. Powder, 100 Md. 36, 108 Am. St. Rep. 380, 59 Atl. 194; Slattery v. Wason, 151 Mass. 268. 7 L. R. A. 395, 21 Am. St. Rep. 448, 23 N. E. 843; Girard Life Ins. Co. v. Chambers, 46 Pa. 485, 86 Am. Dec. 513; In re Shoup's Estate, 31 Pa. Super. 162.
Clares that the property shall not be subjeel to the claims of the cestui's creditors, he has such an interest as to be so subject, if he is given not only a right to the income, but also a right to demand a conveyance of the legal title. He has in such a case an alienable in terest in the corpus of the property.97 Occasional decisions98 to the effect that the gift to the cestui of an absolute right to the possession of land, the subject of the trust, is not incompatible with an exemption of his equitable interest from the claims of creditors, appear open to question. Such a right in the cestui would seem to involve an equitable estate of an absolute character.
There can be no trust for the purpose of rendering the cestui's interest inalienable99 or, it seems, for other purposes;1 if the sole trustee named and the sole cestui named are the same person.
There is one limitation, generally recognized, upon the right to create a spendthrift trust, based on considerations of public policy, to the effect that one cannot settle his property upon himself under a trust by which he himself is given an equitable interest not subject to the claims of his creditors.2 And the same policy has determined the construction of the New York statute which undertakes to exempt the beneficial interests under a trust from liability for the cestui's debts.3 It is clear that the bankrupt and execution laws would become to a considerable extent nugatory if one could, before incurring any debts, place his property in trust, so that he could receive the income thereof without any possibility of recourse thereto by his creditors. It has been decided that one who pays value to another in consideration of the creation of a trust in his favor in effect creates, or has the trust created, out of his own property, within the rule referred to, and that consequently any attempt on his part to relieve his in-interest under the trust from liability for debts is necessarily invalid.4
97. Morgan's Estate, 223 Pa. 228, 25 L. R. A. N. S. 236, 132 Am. St. Rep. 732, 72 Atl. 498; Groom v. Plumbing, etc., Co. 62 Fla. 460, 57 So. 243.
98. Mattison v. Mattison, 53 Ore. 254, 133 Am. St. Rep. 829, 18 Ann. Cas. 218, 100 Pac. 4. In re Minnich's Estate, 206 Pa. 405, 55 Atl. 1067; Garland v. Garland, 87 Va. 758, 13 L. R. A. 212, 24 Am. St. Rep. 682 13 S. E 478.
99. Streit v. Fay, 230 111. 319, 120 Am. St. Rep. 304, 82 N. E. 648; Hahn v. Hutchinson, 159 Pa. St. 133, 28 Atl. 167.
1. Ante, Sec. 104.
2. Brown v. MacGill, ST Md. 161, 39 L. R. A. 806, 67 Am. St Rep. 334, 39 Atl. 613; Pacifli Nat. Bank v. Windram. 133 Mass. 175; Hale v. Bowler, 215 Mass. 354, 102 N. E. 415; Mc-Ilvaine v. Smith, 42 Mo. 45. 97 Am. Dec. 295; Mackason's Appeal, 42 Pa. 330; Ghormley v. Smith, 139 Pa. 584, 11 L. R. A. 565, 23 Am. St. Rep. 215. 21 Ml 135; Egbert v. De Solms. 218 Pa. 207, 67 Atl. 212: Menken Co. v. Brinkley, 94 Tenn. 721, 31 S. W. 92.
It being conceded that, even in jurisdictions in which spendthrift trusts are recognized, one cannot create an equitable interest in his own favor which will not be subject to involuntary alienation in behalf of his creditors, the question might arise whether one can create such an interest in his own favor not subject to voluntary alienation by him. There appears to be no decision in this regard, but it would seem that on principle the same rule might well apply in both cases. Opposed as are the courts to restrictions upon the power of alienation, there appears to be no reason why they should allow the owner of property, while retaining the beneficial ownership in other respects, to deprive himself of this power by the creation of a trust.
Statutory provisions. In a number of states the question of the rights of creditors as against the interest of a cestui que trust is fixed by the statutes. so as to render the intention of the creator of the trust in this regard immaterial. The New York Real Property Law5 provides that where a trust is created to re ceive the rents and profits of real property, and no valid direction for accumulation is given, the surplus of such rents and profits, beyond the sum necessary for the education and support of the beneficiary, shall be liable to the claims of his creditors, while the Code of Civil Procedure6 provides for a proceeding to discover property held in trust for a judgment debtor, except "where the trust has been created by a person other than the judgment debtor." But by force of an act passed in 1908, the creditor can subject to his claim ten per cent of the income of a trust fund even though the trust was created by a person other than himself.7 Consequently, at the present time, a creditor of the cestui may, it seems, subject to his claim not only any surplus over the sum necesary for the maintenance of the cestui, but also ten per cent of the total income.8 But there, as elsewhere,9 if the trustee has an absolute discretion as to what part of the income he will pay to the cestui, the latter has nothing which can be reached by his creditors.10