Before DUFFY, KNOCH and CASTLE, Circuit Judges.
Otto Young died November 30, 1906. By his will, he created a trust which was to terminate upon the death of his last surviving daughter, provided his youngest surviving grandchild had attained the age of twenty-one years. Upon termination, the corpus of the trust was to be distributed equally among his grandchildren, with issue of deceased grandchildren representing their parent per stirpes. This appeal involves another phase of extensive litigation*fn1 growing out of the will of Otto Young, deceased.
In 1943, an action was initiated in the United States District Court for the Northern District of Illinois to construe the will of Otto Young. This action culminated in a decision by this Court that, inter alia, the grandchildren's future interests were vested subject to divestment. DeKorwin v. First National Bank of Chicago, 7 Cir., 179 F.2d 347. Following this decision, Graveraet Young Kaufman, whose mother was then the testator's last surviving daughter, began to make various assignments in New York which purported to convey portions of his remainder interest. The last of these assignments was dated August 7, 1956. Kaufman's mother died on August 17, 1956.
On September 4, 1956, The First National Bank of Chicago, as Trustee of the estate of Otto Young, petitioned the District Court for instructions. It alleged, among other things, that it had notice of the assignments made by Kaufman and sought the aid of the Court in determining to whom it should pay Kaufman's share of the corpus of the trust.*fn2 In his answer to the Trustee's petition, Kaufman alleged that the remainder interest was not assignable by virtue of the spendthrift clause of the will of Otto Young, and also that the assignments were void as they were loan transactions which violated the usury statutes of the State of New York.
On October 14, 1957, Henry N. Rapaport filed a motion for summary judgment directing the Trustee to pay him in excess of $247,000 of Kaufman's remainder interest. As to a portion of this amount, Rapaport is acting as attorney to collect for the estate of Gustave Rubner, deceased. Rapaport was subsequently joined by five other parties who seek to recover various sums from Kaufman's remainder interest. All of these parties, who are appellants in Appeal No. 12573, are sub-assignees of parts of five assignments which originally were made by Kaufman to one Philip Rosen.
In answer to this motion, Kaufman again alleged the assignments were void as being violative of the spendthrift clause in Young's will, and that they violated the usury statutes of the State of New York where they were executed. In addition, Kaufman filed a motion for summary judgment against the various claimants.
On November 12, 1958, the District Court filed a "Memorandum of Decision". This is a lengthy document consisting of forty-two pages of the printed record. It covered a number of points that had been litigated. The Court held, inter alia: 1) the spendthrift clause of the will applied to corpus; 2) the assignments could not be enforced against the Trustee, hence claimants' motion for a summary judgment was denied; 3) there was a statement in the decision that claimants could bring an action against Kaufman if their assignments were valid; 4) that a determination of the issue of usury would require a trial to determine various issues of fact, but that such a trial was unnecessary as the assignments constituted valid, enforceable loans at an implied interest rate of six percent. The Court then ordered an accounting to determine the amount actually paid to Kaufman for the assignments as well as proper out-of-pocket expenses of the assignees.
From this order the claimants (in Appeal No. 12573) appealed, claiming 1) the spendthrift clause of the will does not apply to corpus; 2) the assignments were valid sales of future interests and the usury laws are not applicable to them; and 3) Kaufman is estopped to challenge the validity of the assignments. The claimants in Appeals Nos. 12572 and 12574 also have appealed from this order. They do not claim under the five assignments here at issue, but do claim under other assignments made by Kaufman, and contend that any decision on the issues raised in the instant appeal will materially affect their rights. Appellants in Appeal No. 12571 contend their rights should not be affected by our decision in Appeal No. 12573, and request that we so state. The appellants in Appeal No. 12571 claim under other assignments made by Kaufman and other grandchildren of Otto Young.
Kaufman was a man experienced in matters of finance and loans. From 1921 to 1932, he was associated with one of the large banks in New York City. His early experiences were with the discount, collateral loans and credit departments. By 1926, he was an assistant vice president where his duties included the analysis of loans. From 1928 to 1932, he was a first vice president of the bank and received an annual salary as high as $34,000. He was in charge of the bank's largest branch office, and served on the discount committee which met weekly to discuss loans and other banking matters. He later became associated with several brokerage houses, and in 1946 became associated with a bank where he was employed until 1951.
Kaufman made his first assignment on September 25, 1950. At that time he was fifty years old. From 1947 through the middle of 1950, he received at least $1000 a month from his mother. From 1946 through 1951, he earned a salary of $3000 per year plus an expense account of from $1200 to $2400 per year.
Prior to making his first assignment of a portion of his remainder interest, Kaufman attempted to borrow on that interest by offering it as security. He was unable to arrange such loans. In 1950, Kaufman negotiated with Rosen for the sale of part of his remainder interest. In these negotiations it was suggested that insurance on Kaufman's life was essential to protect the assignees in the event he predeceased his mother, in which case Kaufman's remainder interest would terminate. However, it was never suggested that Kaufman pay for such insurance and, in fact, he never did pay any premiums.
The assignments in issue were made in April, July, November and December of 1951, and in April of 1952. In these assignments Kaufman purported to grant, bargain, sell, assign, transfer, and set over to Rosen all of his right, title and interest to the corpus of the trust to the extent of $62,500, $42,000, $42,000, $87,500 and $87,500, respectively. The amounts paid to Kaufman were $15,000, $10,075, $10,000, $20,000 and $20,000 respectively. Thus, by the five assignments, Kaufman purportedly sold an interest of $321,500 of his remainder for $75,075. Contemporaneously with the assignments, Kaufman executed affidavits which recited that the assignments were made of his own free will, and that in his opinion the consideration was fair and adequate. At the time of the sub-assignments to Rapaport, Kaufman executed an estoppel certificate stating that the assignments were valid and subsisting, that he had no defenses, offsets, or counterclaims thereto, that he had sold the portions of his interest, and that he agreed to the sale. At the time of the various assignments, Rosen took out insurance on Kaufman's life. The total coverage amounted to $159,000. This amount was determined by Rosen. All premiums on such insurance were paid by Rosen or the sub-assignees.
Concerning the holding by the District Court that the spendthrift clause of the will applied to corpus, appellants contend Judge Igoe's earlier decision to the contrary is res judicata. In his earlier opinion, Judge Igoe stated (84 F.Supp. 918, 929-930): "The leaning upon the spendthrift trust clause by counsel for the Bank, in this connection, affords no support for its position. The testator when inserting this clause in the income gifts was concerned only with protection of the income beneficiaries against creditors. And if, as the Bank contends, the testator had a ...