Opinion
May, 1904.
N.A. Calkins, for the appellant.
D.H. Daley, for the respondent.
It seems clear that under the ante-nuptial agreement aforesaid, Belzora Hallock became the absolute owner of the $500 which was paid to her by Travis. There is no reservation of that sum, or any part of it, by the terms of the agreement; nor is there any limitation, by its terms, as to the use to which she must put such money. It was paid to her as the consideration for her surrender of all dower and marital rights in Travis' property, and she was under no obligations whatever to refrain from expending it at once, or from applying it to whatever purpose she desired. There was no trust created by such agreement. There was an executory contract on her part that as to such portion of the $500 as should remain unexpended at the time of her death, it should be paid over to said Travis or to his heir; but the right to recover such portion rested solely upon her promise, not upon any limitation of its use, nor upon any trust assumed by her concerning the same. Concede, for the sake of the argument, that as to so much of such $500 as remained unexpended, a cause of action arose against her estate upon such promise, I am at a loss to discover upon what theory Travis, or his heir, can claim preference over her other creditors in the enforcement of such claim.
It is a well-settled rule of equity that "where the defendant himself has a right to sell his interest in the trust fund, in anticipation, and to use the proceeds of such sale as he pleases, equity requires that he should appropriate it to the payment of his honest debts; and he must assign such interest to the receiver in a creditor's suit. The owner of real or personal estate may create an interest in the rents and profits, or the income thereof, under the provisions of the Revised Statutes, in trust for the use or benefit of a third person, whom, from improvidence or otherwise, the donor does not think proper to entrust with the absolute disposition and control of his beneficial interest, in the trust property, by anticipation. But neither law nor sound policy will allow an absolute and unconditional right to property to be vested in a person, which he may use and dispose of as he pleases, by anticipation or otherwise, but in relation to which property he may set his creditors at defiance, by means of a mere nominal trust." ( Degraw v. Clason, 11 Paige, 136, 140. See, also, Hallett v. Thompson, 5 id. 583; Wetmore v. Truslow, 51 N.Y. 338, 342.)
In no event, therefore, could the parties by any form of agreement which made Mrs. Travis the absolute owner of such $500, so control the disposition of any part of it after her death as to prevent its application to the payment of her debts. If at the time of her death the whole $500 was necessary for the payment of her debts, then it should not be considered that there was any remainder left unexpended by her.
The whole fund having once become absolutely hers, became absolutely subject to the claims of her creditors, and the right which they had to reach it prior to her death followed it in the hands of her executor after her death. In other words, so far as creditors are concerned, such $500 became and was assets of her estate, and her executor was accountable to her creditors for the same.
This conclusion seems to follow from the well-settled rule of equity above quoted, and the judgment rendered herein is clearly in conflict with it. Upon the record before us the question is one presented between the plaintiff and the creditors of Mrs. Travis, deceased. The executor claims that the $500 is needed to pay Mrs. Travis' debts, and so far as the evidence discloses it will be so needed. The trial court has decreed, in substance, that such $500 was not assets of Mrs. Travis, but was the property of this plaintiff. Such conclusion was error, and for that reason the judgment must be reversed.
All concurred.
Judgment reversed on law and facts, and new trial granted, with costs to appellant to abide event.