Trust for life with income to be free from interference or
control of creditors of the beneficiary are, in Massachusetts,
valid and effective against creditors, and, under certain
condition, against assignees in insolvency and trustees in
The policy of the Bankruptcy Act is to respect state
A trust fund established by a will, the whole of the income to
be paid during life of the beneficiary with such portion of the
principal as shall make the annual amount to be paid at least a
stated sum, said income to be free from interference or control of
in this case, following the decision of
the highest court of Massachusetts, not to pass to the trustee in
bankruptcy of the beneficiary under § 70a(5) of the Bankruptcy
The facts, which involve the construction and application of §
70a(5) of the Bankruptcy Act and of the rights of the life tenant
in a trust fund created under the laws of Massachusetts, are stated
in the opinion.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill for instructions brought by the Trust Company,
the principal defendant in error, to ascertain whether a fund
bequeathed to it in trust for Mrs. Luke,
Page 240 U. S. 428
codefendant in error, passed to her trustee in bankruptcy. The
bequest was of $75,000,
"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."
It is established law in Massachusetts that such trusts are
valid and effective against creditors, Broadway National Bank
133 Mass. 170, and, subject to what we are about to
say, against assignees in insolvency or trustees in bankruptcy.
Billings v. Marsh,
153 Mass. 311; Munroe v.
176 Mass. 184. The trustee in bankruptcy seeks to avoid
the effect of these decisions on the ground that Mrs. Luke's
equitable life interest was held by the supreme court of the state
to be assignable, and that therefore it passed under § 70a(5) of
the Bankruptcy Act, vesting in the trustee all property that the
bankrupt "could by any means have transferred." The Supreme
Judicial Court, however, held that the above-cited cases governed,
and that the property did not pass. 220 Mass. 484.
If it be true without qualification that the bankrupt could have
assigned her interest, and by so doing, could have freed from the
trust both the fund and any proceeds received by her, the argument
would be very strong that the statute intended the fund to pass.
There would be an analogy, at least, with the provision giving the
trustee all powers that the bankrupt might have exercised for her
own benefit, § 70a(3), and there would be difficulty in admitting
that a person could have property over which he could exercise all
the powers of ownership except to make it liable for his debts. The
conclusion that the
Page 240 U. S. 429
fund was assignable was based on two cases, and we presume was
meant to go no farther than their authority required. The first of
these simply held that an executor was not liable on his bond for
paying over an annuity to an assignee as it fell due, when the
assignor to whom it was bequeathed free from creditors had not
attempted to avoid his act. Ames v. Clarke,
106 Mass. 573.
The other case does not go beyond a dictum that carries the
principle no farther. Huntress v. Allen,
195 Mass. 226. It
is true that, where the restriction has been enforced, there
generally has been a clause against anticipation, but the present
decision, in following them, holds the restricting clause
paramount, and therefore we feel warranted in assuming that the
power of alienation will not be pressed to a point inconsistent
with the dominant intent of the will. Whether, if that power were
absolute, the restriction still should be upheld, as in case of a
statutory exemption that leaves the bankrupt free to convey his
rights, it is unnecessary to decide.
The law of Massachusetts treats such restrictions as limiting
the character of the equitable property, and inherent in it.
Dunn v. Dobson,
198 Mass. 142, 146; Lathrop v.
207 Mass. 6, 9. Whatever may have been the criticisms
upon the policy and soundness of the doctrine, and whatever may be
the power of this Court to weigh the reasoning upon which it has
been established by the Massachusetts cases, Page v.
Edmunds, 187 U. S. 596
187 U. S. 602
it has been established too long, and is too nearly sanctioned by
the decisions of this Court, to be overthrown here. Nichols v.
Eaton, 91 U. S. 716
Shelton v. King, 229 U. S. 90
229 U. S. 99
The policy of the Bankruptcy Act is to respect state exemptions,
and until the Massachusetts decisions shall have gone farther than
they yet have, we are not prepared to say that the present bequest
is not protected by the Massachusetts rule.