the reach of creditors. Notwithstanding the life beneficiary was solvent and free from debt at the time he created the trust, the interest of the estate which he has reserved to himself is subject to a judgment upon a debt incurred subsequently to the creation of the trust.' The ground upon 152 which such estates have been declared alienable and liable for debts is that inalienable rights of property are opposed to the fundamental principles of the common law, and that it is against public policy that a man should have an estate to live on but not an estate to pay his debts with. 39. The decisions of the federal court are also not uniform but somewhat in conflict, some of the cases opposing the doctrine of spendthrift trusts, others favoring it. 153 Thus, it is held that it is a settled rule of law that the beneficial interest of the cestui que trust, whatever it may be, is liable for the payment of his debts. It cannot be so fenced about by inhibitions and restrictions as to secure to it the inconsistent characteristics of right and enjoyment to the beneficiary and immunity from his creditors. A condition precedent that the provision shall not vest until his debts are paid, and a condition subsequent that it shall be divested and forfeited by his insolvency, with a limitation over to another person, are valid, and the law will give them full effect. Beyond this, protection from the claims of creditors is not allowed to go. This view appears to be in accord with the English doctrine which, as has been shown, is opposed to the doctrine of creating these trusts and making the equitable estate inalienable and not liable for the debts of cestui que trust. However, in another case, which is cited among the leading ones in favor of spendthrift trusts and their usual incidents of inalienability and non-liability for debts, the United States supreme court held that a devise of the income of property, to cease on the insolvency or bankruptcy of the devisee, and to then go to his wife or children, is valid; that is, not against public policy or against the policy of the law of bankruptcy. In rendering this decision, = 152 156 N. Y. 316 (1898). 1535 Wall, (U. S.) 433 (1867). language was used which unmistakably sustained the liberal doctrine of throwing protection around spendthrift trusts. The court said: "Nor do we see any reason, in the recognized nature and tenure of property and its transfer by will, why a testator who gives without any pecuniary return, who gets nothing of property value from the donee, may not attach to that gift the incident of continued use, of uninterrupted benefit of the gift, during the life of the donee. Why a parent or one who loves another, and wishes to use his own property in securing the object of his affection, as far as property can do it, from the ills of life, the vicissitudes of fortune, and even his own improvidence or incapacity for self-protection, should not be permitted to do so, is not readily perceived. 99154 40. Statutory Regulations. - Spendthrift trusts are expressly declared valid by statutes, in some states, though, in some instances, the enactments provide that property vested in trustees for the use of another is subject to the debts of the cestui que trust. As sanctioning the validity of these trusts, the New York statute, which has been followed in other states, including California, New Jersey, Minnesota, Michigan, and Wisconsin, is a fair sample. It excludes from proceedings in equity to reach beneficial interests all cases of trusts for maintenance and support, when the trust has been created by, or the trust fund has proceeded from, some person other than the debtor, but makes available to the creditor any surplus beyond what may be necessary for the maintenance and support of the beneficiary."** TRUSTS FOR MARRIED WOMEN 41. A trust for the sole and separate use of a married woman is one created in order to secure to her the beneficial enjoyment of property during marriage and to exclude the rights of the husband therein. While no particular formality is required to raise such a trust, the word separate has been 15491 U. S. 725 (1875), by Miller, J. 155 Am. & Eng. Encyc. Law (1st Ed.), Vol. 23, pp. 12, 13. given a technical meaning by the courts and its use will, of itself, exclude the rights of the husband. At common law, the marital rights of the husband attached to the equitable estate of a married woman. The effort to mitigate the severity of that law doctrine gave rise to the equitable creation of the wife's equity and the equitable separate estate. The separate property of a married woman is that which is settled to her sole and separate use by some will, writing, or deed of settlement, with a power expressly or impliedly given her of managing it without the concurrence of her husband. No particular form of words is required, but any form which sufficiently indicates the intention to exclude the rights of the husband will be sufficient. The courts have passed upon a great variety of expressions as sufficient and insufficient, a summary of which is given in another title of this Course, where, also, the subject of trusts for married women is treated.157 156 Bisph. Eq. (5th Ed.), c. 4, p. 157; Per. T. & T. (5th Ed.), Vol. 2, c. 22. 157 See The Law of Husband and Wife: Separate Property of Married Women. TRUSTEES 42. Definition. - A trustee is a person in whom some estate, interest, or power in or affecting property of any description is vested for the benefit of another; one to whom property has been conveyed to be held or managed for another." To a certain extent, executors, administrators, guardians, and assignees are trustees, and the law of trustees is applicable to them in their capacity of trustees."" ever, here we have only to do with trustees generally, such as are known by that name in reference to trusts, as explained under this particular title. POWERS, DUTIES, AND LIABILITIES 43. The duties of the trustee, in general, are such as follow from the nature of his office. He must protect and preserve the trust property and apply it only for the benefit of the cestui que trust. He must do neither more nor less than he is required by the instrument creating the trust. If he assume power not granted him or neglect an obligation placed upon him, he thus renders himself liable to the extent of any loss he may so occasion.160 Or, his action may be disregarded entirely. For example, where a married woman was directed by a trust deed to dispose of property by deed or will, and she disposed of it by bill of sale, it was held that no title passed by the bill of sale."* All that is required of trustees is common skill, common prudence, and common caution. They are not liable beyond what they actually receive unless in case of gross negligence, for when they act as others do with their own goods, in good faith, they are not liable.' 158 Bouv. Law Dict. 159 Hill Tr. 49. 160 Ibid., 746-748. 162 1618 Humph. (Tenn.) 159 (1847). The trustee's duties vary with the kind of property that he holds in trust; for he may be a trustee either of real property or of personal property, or of both. In a trust of personal property the first duty that falls upon the trustee is that of reduction into possession, that is, he must put it beyond danger of loss by getting it into his own hands, personal property being easy of transfer and liable to come into the possession of a purchaser for value, ignorant of the trust. Where the property consists of things for which an action may be brought, such as books of account or debts, he must be prompt to reduce them into possession, and if he be remiss and cause loss, he is liable. However, if delay be caused by refusal of the holder of the property to deliver it to him, he is not responsible, but he should at once bring an action for possession." He is held blameless, likewise, in all cases where loss is occasioned by circumstances beyond his control. Once in possession of the property, a trustee becomes responsible for it and is accountable for the manner in which he disposes of it; but his responsibility is limited. If he can show that he has conducted the affairs of the trust as a prudent man would conduct his own business, and has acted within the scope of the trust, he is not liable for losses which occur from his management of the trust funds. He may be exonerated from losses resulting from this ignorance of the law, in case he exercise proper diligence and caution, and act upon the advice of counsel.16* Depositing funds in bank is a natural and often a necessary incident to the care of a trust estate. The rule that whatever diligence is customary, in the case of funds, by a man of ordinary prudence, will be required of a trustee, extends to the depositing of funds in bank. In the absence of negligence on his part, the trustee will be shielded from liability for losses growing out of the failure of the bankers. Where there are more trustees than one and reduction into 163 14 Vt. 28 (1842). 164 Hill Tr. 573; 20 Ohio St. 444 (1870). 165 165 Am. & Eng. Encyc. Law (1st Ed.), Vol. 27, pp. 158, 159, citing Story Eq. Jur., Vol. 2, Sec. 1,269; Hill Tr. 573. |