Home BOSTON SAFE DEPOSIT AND TRUST COMPANY, trustee, vs. FANNIE L. LUKE & trustee.

220 Mass. 484

January 13, 1915 - March 9, 1915

Suffolk County

Present: RUGG, C. J., LORING, BRALEY, DE COURCY, & CROSBY, JJ.

Trust, Spendthrift. Bankruptcy.

The interest of an adopted daughter of a testator under the provisions of a trust created by his will which required that the whole net income of the trust fund should be paid to her quarterly during her life "together with such portion of the principal of said trust fund as shall make the amount to be paid her at least $3,000 a year during her life, said income to be free from the interference or control of her creditors," although it is assignable because there is nothing in the will which forbids its assignment, is not affected by the adopted daughter being adjudicated a bankrupt, and the trustee under the will should pay to her and not to the trustee in bankruptcy of her estate the income of the fund accruing after such adjudication.


BILL IN EQUITY, filed in the Supreme Judicial Court on April 7, 1914, by the trustee under the will of John W. Leighton, late of Brookline, seeking instructions as to whether the interest of the defendant Fannie Leighton Luke under the clause of the will quoted below passed to the trustee in bankruptcy of her estate.

The clause of the will in question was as follows:

"Second: I give, devise and bequeath to the Boston Safe Deposit and Trust Company, a corporation duly established under the laws of the Commonwealth of Massachusetts and located at Boston, in said Commonwealth, the sum of Seventy-five Thousand Dollars in money, but in trust nevertheless, to invest, hold, re-invest and manage the same separate and apart from all other property held by it in trust, and pay over the net income and principal thereof as follows:

"(1) The whole of the net income thereof to be paid my adopted daughter, Fannie Leighton Luke, wife of Otis H. Luke, of said Brookline during her life quarterly in each and every year together with such portion of the principal of said trust fund as shall make the amount to be paid her at least Three Thousand Dollars a year during her life, said income to be free from the interference or control of her creditors."

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The testator died in 1897. Fannie Leighton Luke was adjudicated a bankrupt on December 3, 1913.

The case was reserved by De Courcy, J., for determination by the full court.

H. F. Atwood, for the plaintiff, stated the case.

R. H. Oveson, for the defendant Fannie L. Luke.

G. E. Kemp, for the trustee in bankruptcy.


LORING, J. The trustee in bankruptcy seeks to take this case out of the decisions made in Billings v. Marsh, 153 Mass. 311 , and Munroe v. Dewey, 176 Mass. 184 , because the bankrupt's equitable life interest in the case at bar was assignable. There is nothing in the will which forbids the life tenant's assigning her equitable life interest. It follows that it was assignable. Ames v. Clarke, 106 Mass. 573 . Huntress v. Allen, 195 Mass. 226 .

It is the contention of the trustee in bankruptcy that, being assignable, the life interest passed to him under ยง 70 a (5) of the bankrupt act, which provides that all "property which prior to the filing of the petition he [the bankrupt] could by any means have transferred" shall vest in the trustee.

But the immunity of the equitable life interest in the case at bar does not depend upon the kind of property which (by the terms of the bankrupt act) passes to the trustee in bankruptcy. The immunity of the equitable life interest goes farther back. It goes back to the fact that this equitable life interest is not subject to bankruptcy proceedings at all. By the terms of the will creating it the equitable life interest here in question is to be "free from the interference or control of her [the life tenant's] creditors." It is immaterial whether the machinery set in motion by the creditors is a bill in equity to reach and apply her equitable interests, or an involuntary petition in bankruptcy to secure all her property legal and equitable. The equitable life estate created by the will here in question is to be "free from the interference or control of her creditors," and under the doctrine of Broadway National Bank v. Adams, 133 Mass. 170 , that direction will be enforced. We have examined all the cases cited by the trustee in bankruptcy and find nothing in them which requires notice.

By the terms of the will "the whole of the net income" is to be "free from the interference or control of her [the life tenant's]

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creditors." The whole income, including all arrearages, is to be paid to the life tenant.

No question has arisen requiring the court to instruct the trustee as to the use of the principal to make the income up to $3,000.

A decree must be entered directing the plaintiff to pay to the life tenant the whole income, including all arrearages; and it is

So ordered.