First Northwestern Trust Co. of South Dakota v. Internal Revenue Service

ROSS, Circuit Judge.

First Northwestern Trust Company of South Dakota, the trustee of the Paul Lex Quarnberg Family Trust, initiated this action for a declaratory judgment of the rights, liabilities, obligations and entitlements of the named party defendants to the income of the trust. In particular, First Northwestern sought judicial determination of the issue of whether the trustee in bankruptcy of one of the beneficiaries of a discretionary spendthrift trust succeeds to that beneficiary’s interest in the income of the trust.

The trust agreement in question was executed in 1970 by C. A.…