Shelley v. Shelley

Grant (defendant) had four children from two marriages that both ended in divorce. Both divorce decrees ordered Grant to pay child support and one ordered alimony payments, but Grant failed to pay either and disappeared. Since Grant was the beneficiary of a trust, his former wives and children sought to reach the assets of the trust in satisfaction of the child support and alimony owed them. The trust had been created by his father’s will to pay income to Grant for life but restricted distribution of the trust corpus until after Grant turned thirty years of age, and then limited it to such amounts that the trustee and other specified persons, in their discretion, considered Grant capable of properly investing. In addition, the trustee was given discretion to distribute trust corpus to Grant or to his children “in an emergency” to provide for their support and care where “unusual and extraordinary expenses are necessary.” The trust also contained a spendthrift provision that restrained Grant from transferring or encumbering his interest in either principle or income and specifically provided that the trust principle and income may not be subject to creditors’ claims. The bank acting as trustee (defendant) interpleaded to respond to the claims against Grant’s beneficial interest in the trust. The matter was ultimately appealed to the Oregon Supreme Court to determine whether the trust’s spendthrift provision was enforceable against child support and alimony claims. The trustee bank argued on appeal that the case finding a spendthrift provision ineffective against claims for alimony and child support should be overruled as inconsistent with a testator’s right to dispose of his property as he chooses.