Appeals, Nos. 199 and 200, March T., 1955, from orders of Court of Common Pleas of Allegheny County, April T., 1955, No. 3309, in case of Ralph Alexander Sproul-Bolton v. Hugh Peter Sproul-Bolton and Peoples First National Bank & Trust Company. Orders affirmed.
James M. Arensberg, with him Charles B. Jarrett, Jr., A. E. Kountz, W. A. Meyer, Edward P. Good, Patterson, Crawford, Arensberg & Dunn, and Kountz, Fry & Meyer, for First National Bank & Trust Company, appellant.
Edward P. Good, with him A. E. Kountz, and Kountz, Fry & Meyer, for Sproul-Bolton, appellant.
Edmund K. Trent, with him Carl E. Glock, and Reed, Smith, Shaw & McClay, for appellee.
Before Stern, C.j., Stearne, Jones, Musmanno and Arnold, JJ.
OPINION BY MR. CHIEF JUSTICE HORACE STERN
Was the corpus of the spendthrift trust here involved immune from attachment by a creditor of the beneficiary after the latter had become entitled to receive it but before it had been paid to him by the trustee? That is the sole question on this appeal.
Elizabeth Howe Sproul, who died in 1934, created a testamentary trust as to a portion of her estate which she bequeathed to trustees in trust to pay the income to a tenant for life and then to the latter's issue during their respective lives; "the right of each of such issue to receive such income to cease, however, upon his or her receipt of a share of the principal as hereinafter provided." A proportionate part of the principal was to be "transferred and conveyed, free and discharged of all trusts, to each of said issue . . . if and when he or she shall have attained the age of thirty years." A subsequent provision was as follows: "I direct that the amounts payable to the various beneficiaries under the trust established by my will shall not be anticipated or assigned by them or any of them, or liable for their or any of their debts or engagements, but that their respective receipts for the money paid them under the provisions of said trusts shall be a full acquittance and discharge of the trustees therefor."
The life tenant died survived by three children, one of whom was the plaintiff, another the defendant, Plaintiff, upon reaching the age of thirty, received from the trustees his one-third of the principal
of the trust, amounting to approximately $40,000. He entered into an oral agreement with his brother, the defendant, whereby the latter agreed to accept in trust such monies and securities as plaintiff might turn over to him from time to time, supervise the investment thereof, and deliver the securities in which the money had been invested to plaintiff at any time upon demand. Plaintiff is a British subject and an officer in the Royal Navy and was on duty in Bermuda for several years; from time to time he turned over to defendant sums aggregating in excess of $104,000. Defendant, having allegedly converted to his own use all these monies and the securities in which they were invested, absconded and his present whereabouts are unknown. He reached the age of thirty on March 31, 1955, and on March 30 and again on March 31 plaintiff served upon the surviving trustee a writ of foreign attachment, seeking to attach defendant's share of the principal of the Elizabeth Howe Sproul trust. At the same time he filed a complaint in equity against defendant for an accounting. The trustee, as garnishee, filed preliminary objections to the attachment, as did also defendant appearing by counsel de bene esse. They contended that, since the funds payable to defendant had not yet been turned over to him by the trustee, they were not attachable in the latter's hands, and they therefore prayed that the writ of foreign attachment be quashed. The court dismissed the preliminary objections and the trustee and the defendant appeal.
There is no question but that a spendthrift trust may validly be created to protect from creditors and from alienation the income to be paid to a beneficiary during a period of life or years. Likewise there is no doubt but that the principal of such a trust may be similarly safeguarded during such ...