MEMORANDUM AND ORDER
At an earlier stage in these proceedings the Court found that the defendants herein, W. A. ("Tony") Boyle, George Titler, and John Owens, as officers of the plaintiff United Mine Workers of America (UMWA), had violated fiduciary duties imposed upon them by Section 501 of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 501. Pursuant to those findings, on December 9, 1975 a final judgment was entered in favor of UMWA against the defendants jointly and severally in the aggregate amount of $239,993.25 and against defendant Boyle individually in the additional amount of $69,870.50.
A motion by the defendants to alter or amend the judgment was denied on January 9, 1976. On February 6, 1976, defendant Owens noticed an appeal from the judgment of December 9, 1975. That appeal is presently pending.
Each of the three defendants is a beneficiary of the International Union, UMWA Pension Trust (the "Pension Trust") which is administered by The National Bank of Washington as Trustee (the "Trustee"). For the purpose of securing satisfaction of the Court's judgments, on April 6, 1976 the UMWA levied writs of attachment against the beneficial interests of the defendants in the Pension Trust, addressed to the Trustee.
The plaintiff has applied for a judgment against the assets of the defendants held by the Trustee, as a continuing levy equal to 25 percent of their monthly pension payments;
and the Trustee, exercising a discretionary power accorded under the trust instrument, has suspended that percentage of the monthly payments due the defendants under the Pension Trust pending a final determination of the UMWA's right to execution upon the writs.
The defendants have moved to quash the writs of attachment. The Trustee has entered an appearance as garnishee and fiduciary in order to defend the Pension Trust. See 16 D.C. Code § 554.
II. The Nature of the Pension Trust
Since the principal contentions advanced in support of and in opposition to the various pending motions involve the interpretation and ultimate effect of Paragraph 12 of the Pension Trust Indenture, as amended, (the "Indenture"), the Court must determine at the outset whether or not that provision creates a valid spendthrift trust. Paragraph 12 states, in pertinent part,
No employee or retired employee shall have any right, title, or interest to any portion of the Pension Fund held by the Trustee, until actual payment to the retired employee by the Trustee. No assignment, anticipation, pledge or encumbrance whatsoever shall be permitted and no attempts on the part of the retired employee to transfer or pledge his right to any payment or portion of the monthly pension herein provided shall be recognized by the Trustee. All pension payments shall be made directly into the hands of the retired employee and to no other person, nor shall any such monthly payments be subject to attachment or other legal process (Plaintiff's Exh. 1).
Although a small number of states
adhere to the so-called "English Rule" that spendthrift trusts are invalid to the extent that they purport to restrain voluntary and involuntary alienation of the beneficiary's interest, the general validity of such trusts is today recognized in a majority of jurisdictions,
either by statute or, as in the District of Columbia, by judicial decision. See Fearson v. Dunlop, 21 D.C. 236 (1892); King v. Shelton, 36 App. D.C. 1 (1910), aff'd sub nom., Shelton v. King, 229 U.S. 90, 57 L. Ed. 1086, 33 S. Ct. 686 (1913); Morrow v. Apple, 58 App. D.C. 171, 26 F.2d 543 (1928); Ridgeway v. Woodward, 64 App. D.C. 399, 78 F.2d 878, cert. denied, 296 U.S. 575, 80 L. Ed. 407, 56 S. Ct. 146 (1935); Buchanan v. National Savings and Trust Co., 79 U.S. App. D.C. 278, 146 F.2d 13 (1944); Liberty National Bank v. Hicks, 84 U.S. App. D.C. 198, 173 F.2d 631 (1948); Seidenberg v. Seidenberg, 96 U.S. App. D.C. 245, 225 F.2d 545 (1955); American Security and Trust Co. v. Utley, 127 U.S. App. D.C. 235, 382 F.2d 451 (1967).
Whether a valid spendthrift trust has been created in a particular instance is an issue controlled by the intent of the settlor (or trustor) as manifested in the language actually employed -- "no special form of words is necessary." Morrow v. Apple, supra, 58 App. D.C. at 172, 26 F.2d at 544. Thus, a trust which by its terms imposes "a valid restraint on the voluntary and involuntary transfer of the interest of the beneficiary" is a spendthrift trust. Restatement (Second) of Trusts § 156 (2) (1959) [hereinafter "Restatement"].
Applying the foregoing legal principles to the terms of paragraph 12 of the Trust Indenture, we conclude that the settlor did in fact create a valid and enforceable spendthrift trust. From the unequivocal language used the desire to impose an absolute restraint upon the voluntary and involuntary alienation of the beneficiary's equitable interest is evident. A retired employee-beneficiary has no right, title or interest in any portion of a monthly pension payment until an actual disbursement to him has occurred. The Trustee is expressly directed to make all payments to the beneficiary and any attempt by a retired employee to transfer or pledge any monthly payment, or portion thereof, is declared of no effect. Moreover, it is explicitly stated that pension trust payments shall not be "subject to attachment or other legal process."
However, where a spendthrift trust has been created, it does not inexorably follow that its terms constitute an absolute bar to the lawful claims of all classes of creditors. For, as the Court of Appeals in American Security and Trust Co. v. Utley, supra, noted:
We have long recognized the validity of the so-called spendthrift trust, but not without limitation. The historical purpose of the settlor or testator in creating a trust, the income of which was protected from invasion, was to protect the interests of the beneficiary. This purpose has been held to render the income totally immune from claims . . . We see no reason for an absolutist "all or nothing" approach. See, e.g., Shelley v. Shelley, 223 Or. 328, 334, 354 P.2d 282, 285 (1960). Traditionally, in the absence of a statute, several distinct classes of claimants have been permitted to invade the beneficiary's interest. See Restatement, supra, at § 157. (Footnotes omitted). 127 U.S. App. D.C. at 236-37, 382 F.2d at 452-53.
The UMWA asserts an exception. It contends that even if paragraph 12, supra, of the Trust Indenture imposes an otherwise valid restraint upon voluntary and involuntary alienation of the defendants' beneficial interests, considerations of public policy militate against application of its prohibitory effect in the circumstances at hand, viz. : (1) "self dealing" by these defendants in the creation and subsequent amendment of the Pension Trust, and (2) the tortious nature of defendants' conduct underlying the Court's final judgment. We address each of those contentions separately.
Even in those jurisdictions which regard spendthrift trusts as generally enforceable, it is acknowledged that "one cannot settle upon himself a spendthrift or other protective trust, or purchase such a trust from another, which will be effective to protect either the income or the corpus against the claims of his creditors, or to free it from his own power of alienation", 76 Am. Jur. 2d Trusts § 168; see Shelton v. King, supra; Liberty National Bank v. Hicks, supra; American Security and Trust Co. v. Utley, supra; Restatement, supra at § 156; Scott, supra at § 156; Bogert, supra at § 223; Annot., 34 A.L.R. 2d 1335 (1954). This rule has application not only to those "who make a direct conveyance to a trustee in trust for themselves," but also to "persons who procure the creation of trusts for their benefit". Bogert, supra at § 223.
The defendants herein clearly do not fall within the category of direct settlors since they have made no "direct conveyance" to the Trustee. From its inception, the Pension Trust has been non-contributory and a gratuity by the UMWA to its former employees. However, it is the plaintiff's contention that in the creation and amendment of the Trust Indenture, the defendants, as former UMWA employees and/or officers, had it within their power and discretion to exclude themselves as Pension Trust beneficiaries and, in failing to do so, the defendants became indirect settlors of the Trust.
We have some difficulty perceiving the logic of plaintiff's novel arguments in this regard. But assuming arguendo that in certain situations tacit ratification through inaction might transform a beneficiary into spendthrift settlor, careful examination of the record before the Court leads to the conclusion that the UMWA's contentions are factually untenable.
On December 29, 1959, pursuant to an authorizing resolution of the UMWA International Executive Board, the Pension Trust Indenture was executed by and between the International Union, UMWA as "Trustor" and The National Bank of Washington as "Trustee." It was created to provide retirement income to former employees of the International Union and those of UMWA Districts 1 through 31 (Plaintiff's Exh. 1, par. 8, et seq.). The document was signed, on behalf of the International Union by its then president John L. Lewis, vice president Thomas Kennedy, and secretary-treasurer John Owens. The spendthrift provision, supra, was included at paragraph 12 and has remained unaltered through five subsequent amendments of the basic document. Each amendment bears the signatures of two or more of the defendants as UMWA International officers, but only the two most recent were endorsed by all three of the defendants herein.
Standing alone, the signature of defendant Owens on the original document and those of two or more of the defendants on each of the five amendments constitute prima facie evidence of nothing more than the fact that unions act through their officers. Plaintiff has presented no proof to rebut the presumption that these documents, which, on their face, bear every appearance of regularity and validity were, in fact, duly authorized by the UMWA International Executive Board. The record is devoid of any showing, for example, that the trust or its amendments resulted from undue influence or ultra vires activity by the defendants or that the final content of the documents was other than that which had been authorized.
In short, the UMWA has proffered no evidence which would permit the inference that defendants Boyle, Titler and Owens procured creation of or amendment to the UMWA Pension Trust for their personal benefit. Consequently, we are unable to reach any conclusion but that the exclusive settlor of the Pension Trust was the Union itself. In this respect, at least, the defendants occupy the same status with respect to the trust as any of its other beneficiaries.
B. Public Policy and Tort Creditors
As we have previously noted, in most situations the courts of this jurisdiction have given effect to spendthrift provisions immunizing the beneficiary's interest from claims of his creditors. Nonetheless, on public policy grounds, certain narrowly delineated classes of creditors have been excepted from application of the spendthrift doctrine and permitted to "reach the interest of the beneficiary, notwithstanding an express direction to the contrary in the trust instrument." Bogert, supra at § 224; see American Security and Trust Co. v. Utley, supra, [and cases cited therein]. The commonly recognized public policy exceptions to the spendthrift trust doctrine are set forth at Section 157 of the Restatement, supra :
. . . the interest of the beneficiary can be reached in satisfaction of an enforceable claim against the beneficiary,
(a) by the wife or child of the beneficiary for support, or by the wife for alimony;