Rice v. Stanley

Paul W. Brown, J.,

dissenting. In my view, the language of the wills involved herein is totally defective. It requires the trustee to hold the estate until the building of a special hospital by someone in such a way as to satisfy the criteria contained in the wills. Distribution to charity is conditioned upon this event. The wills do not provide for any other distribution.

*227 No perpetuities cases, such as this one, involving gifts for charitable purposes that are conditioned upon the occurrence of events that might occur, if at all, at a time beyond the period of the rule against perpetuities, can be found in Ohio. But a fact pattern strikingly similar to the Conover trusts was considered by the Supreme Court of Kansas in Malmquist v. Detar (1927), 123 Kan. 384 , 255 P. 42 . There, the testator gave $10,-000 “to the board of trustees or other managing body in charge and control of the first public hospital which shall hereafter be established in Kinsley, in Edwards County, Kansas, to be used to apply upon the cost of construction of a suitable building for such hospital * * #. In the event that no such hospital shall have been established in Kinsley at the date of my death, then * * * I direct that said sum shall be taken and held by my executor and his successors, in trust * * * and whenever such a hospital shall be established in said county and city, then said executor or his successors shall pay over said sum * * * to the board of trustees or other managing body in charge and control of such hospital Sfc & # J J

The Supreme Court of Kansas found that the attempted gift violated the rule against perpetuities, because vesting of the fund depended on a future contingent event that might never occur. The court, at page 385, stated:

“At the date of the testator’s death no hospital had been established in Kinsley, and no facts were known from which it could be predicted that a hospital might be established in Kinsley at any future time. The gift was one for a charitable purpose, but not to the executor of the will. Neither he nor his successors in trust may establish a hospital. They are merely managing trustees, to invest the fund and keep it intact until a donee with capacity to take comes into existence. The court has no power to appoint a trustee who may devote the fund to the designated purpose, because of the form of the gift. Some one, a private corporation or other business association, an individual, or the county or city, must *228 establish a hospital. The fund shall then be paid over to the board of trustees, or other managing body in control of the hospital, to aid in its construction. While the court can keep in existence a trustee who shall perform the functions of the executor and his successors, it can empower no one to establish a hospital * *

The treatise writers have recognized, and agree with, the law as found by the Kansas court in Malmguist, supra. Bogert, Trusts and Trustees, and Scott, The Law of Trusts, agree that a gift for a charitable purpose which is conditioned on the happening of an event that might occur at a remote time, if it occurs at all, is void. 3 Simes and Smith, the Law of Future Interests (2 Ed.), Sections 1281, 1282 and 1285, 1 and 2 Restatement of the Law, Trusts 2d, 314, Section 401, comment j, are in accord.

Bogert says:

“* * * [T]he settlor may provide for the * # * springing up of a charitable trust at a future date, without creating any precedent interest. * * * [H] e may devise his farm to trustees for a nurses’ home if a hospital is ever established in the city of his residence. * * * There is no certainty that the event will occur within any particular lives in being and twenty-one years. * * * The gift to the trustees for charity * * * is therefore ‘remote’ and void. * * *” (Emphasis added.) 3 Bogert, Trusts and Trustees (2 Ed.), 743, Section 343. 2

*229 Scott is to the same effect:

“In some cases it is more doubtful whether there is an unconditional gift to charity with payment postponed or whether the gift is subject to a condition precedent which may not be performed within the period of the rule against perpetuities and is therefore invalid. This question arises where money is left in trust to assist a church or hospital or school or other institution if such institution should *230 at any time be established. If the gift is contingent upon the establishment of the institution, it fails because the contingency is too remote. * * * ’ ’

(Emphasis added.) 4 Scott, The Law of Trusts (3 Ed.), 3165, Section 401.8.

The majority fails to distinguish between cases in which the charitable gift is made to trustees for a corporation to he organized after the death of the testator, and those in which the charitable gift is to trustees for a corporation if organized.

Although the syllabus language correctly states the law, that law does not apply to the facts of this case, wherein the language of the wills is conditional. This being true, they cannot be construed to constitute immediate gifts. The language of the Restatement quoted with approval by the majority therefore applies, and these trusts must fail.

Nor do those wills to which the majority points, and in which there is a direction that a corporation be organized for the charitable purpose, parallel the Conover mils, which give their trustee no such authority. As the issue is stated in the majority opinion, each Conover will was “a bequest * * * to a charitable corporation to be organized af *231 ter the death of the testator.” I find uo such testamentary language or intention in the Conover wills.

In my view, the majority opinion ignores rather than “avoids” the problem of remote vesting explicit in these instruments.

Ould v. Washington Hospital for Foundlings (1877), 95 U. S. 303 , cited prominently by the majority, requires some comment. One should note that although it is a United States Supreme Court case, it is not one which is controlling upon this court. Its rationale turns, in part at least, upon the fact that the case was brought after the use had been “consummated” and was no longer “in fieri,” for the testator died April 1869. On the 22nd of April, 1870, Congress passed an act incorporating a hospital for foundlings in the city of Washington. On the 4th of April, 1872, the trustees conveyed the property to the hospital and the plaintiff’s action of ejectment was instituted thereafter.

It is also noteworthy that Justice Swayne recognized the proposition of remoteness of vesting with the following:

“There may be such an interval of time possible between the gift and the consummation of the use as will be fatal to the former. The rule of perpetuity applies as well to trust as to legal estates. The objection is as effectual in one case as in the other. If the fatal period may elapse before what is to be done can be done, the consequence is the same as if such must inevitably be the result. Possibility and certainty have the same effect. Such is the law upon the subject.”

Cy pres is not applicable to the Conover trusts because the Conovers anticipated the nonexistence of a qualifying hospital at the death of Marie Conover, and expressly provided in detail for the conditions under which a hospital founded thereafter could qualify for the intended gifts of residue.

Any disposition of the Conover trust funds resulting from the application of cy pres will necessarily conflict with the intention of the Conovers. “* * * The theory un *232 derlying the application of cy pres is that the court is doing and fulfilling the intent of the testator. ’ ’ Craft v. Shroyer (1947), 81 Ohio App. 253, 262 .

A general charitable intent is helpful for the purpose of validating a charitable trust which violates the rule against perpetuities, in those cases in which the facts call for distribution of the estate to a charity, and in which distribution becomes impossible.

Even so, I find no such general charitable intent here.

The conditional object of the trusts herein is to benefit a non-profit hospital at, or within one mile of, Franklin, Ohio. The trust provisions set up progressively stringent restrictions which, in summary: (1) prohibit direct or indirect control by a church or religious denomination; (2) require such hospital to be properly organized, managed and controlled; (3) impose conclusive judgment discretion on the trustee with respect to the previous listed qualifications; and (4) specify that, if no qualified hospital exists at each decedent’s death, the funds are to be held until such qualified hospital exists.

The creation of the trusts begins with the specific, which is a nonprofit hospital at, or within one mile of, Franklin, Ohio. The remainder of the provisions applicable thereto impose limitations on that specific object, to a degree that reflects the primary concern of the Conovers for the achievement of a particular and precise goal, the nonattainment of which after all these years argues the total inefficiency of the charitable design, the lack of need for such a facility, the lack of public interest, and even renouncement by the prospective beneficiaries of the proposed trusts.

The difficulty of either triggering a request for cy pres, or of applying it to so narrow a purpose once requested, is apparent. 3

*233 The judgment validates ineptly drawn and defective instruments which have permitted the estates to remain in limbo for a period of more than 30 years. The trusts will vest for the first time after remand and upon application of cy pres by the trial court. I suggest that there are other funds which in similar circumstances become personal fiefdoms of the draftsman or of a trustee of his choice, persisting not for a public benefit but for a private one.

In this case, the plan’s general charitable intent is questionable. The plan’s inefficiency is evident, and it is a classic violation of the rule against perpetuities. Its validation is destructive of the interpretive criteria heretofore applied.

The judgment of the Court of Appeals should be reversed.

Simes and Smith, The Law of Future Interests (2 Ed.), Section 1285 states:

“In order to sustain gifts to charities, courts sometimes employ the cy pres doctrine to the effect that, if a gift to charity cannot be carried out in precisely the manner specified by the settlor, the court may authorize the trustee to carry it out as nearly as possible, where the plan approved is in accordance with the general charitable purpose expressed. * * * If, however, the court concludes that the formation of a particular corporation, whenever that may occur, is a condition precedent to the charitable gift, then it is void.” See First Camden National Bank & Trust Co. v. Collins (1933), 114 N. J. Eq. 59, 168 A. 275 , reversing 110 N J. Eq. 623, 160 A. 848 .

Bogert & Bogert, Law of Trusts (1973), Section 68, states:

“With one exception, the rule against perpetuities having to do with the vesting of contingent interests applies to gifts in trust for *229 charity, to gifts to charitable corporations, and to gifts following charitable trusts. The wording of the gift must be such that the contingent gift will become vested, if it ever vests, at a date measured by lives in being and/or twenty-one years.

“The exception exists in the case of a gift to or in trust for one charity, followed by a contingent gift to or in trust for a second charity, to take effect on the happening of a certain event. In this case the event need not be one certain to occur within a time measured by lives in being and/or twenty-one years, but may be limited to happen at a remote or uncertain future time.

it* * *

“* * * The statement is frequently found in the decisions that the rule against perpetuities does not apply to charitable trusts. ‘It is common knowledge that the rule as to perpetuities does not apply to property given to charities.’ [See Lindley, L. J., in In re Tyler (1891), 3 Ch. 252, 257. See, also, Trustees of New Castle Common v. Megginson, 1 Boyce, Del. 361, 77 A. 565, 570 , Ann. Cas. 1914A, 1207; Bauer v. Myers, 244 F. 902 , 157 C.C.A. 252 . See, also, West’s Ann. Cal. Civ. Code, Section 715 (no perpetuity allowed except for ‘eleemosynary purposes’) .] But, for the reason that ‘the rule against perpetuities’ has in some cases been an ambiguous phrase, these statements have caused much confusion of thought. In some instances the rule against perpetuities means, to the court using it, the rule against remoteness of vesting [see Section 50]; in other cases it means a rule against suspending the power of alienation; and in other instances it may have meant a rule regarding the duration of trusts [see Section 52]. As had been said by a Maine court: ‘The statement is often found in the books that the law against perpetuities does not apply to public charities. But the statement is misleading. It is undoubtedly true that the principle of public policy, which declares that estates shall not be indefinitely inalienable in the hands of individuals, is held inapplicable to public charities. But it must be remembered that the rule against perpetuities, in its proper legal sense, has relation only to the time of the vesting of an estate, and in no way affects its continuance after it is once vested’ [citing Whitehouse, J., in Brooks v. Belfast, 90 Me. 318, 324 , 38 A. 222 ].

*230 . “With respect to the application of the rule against too remote vesting to charitable trusts, four situations may arise: * * * (3) an instrument may provide for the vesting of property in a trustee for charitable purposes at a future time * * *.

“In the third situation are cases where no present gift to charity is made but provision is made for a possible future gift to trustees for charity or to a charitable institution, if a described1 event happens, for example, if a symphony orchestra is ever established in Melbourne, Australia [citing In re Dyer (1935), Vict. L. R. 273], or if a hospital is organized in a named town [citing Malmquist v. Detar, 123 Kan. 384 , 255 P. 42 ]. Here the gift to charity is contingent until the occurrence of the event, and, since there is no way of computing the time which will elapse and no guaranty that the condition precedent to the gift will ever transpire, there is an obvious provision for a contingent interest which is not certain to vest within the period of the rule and the gift is void [citing Chamberlayne v. Brackett (1872), 8 Ch. App. 206; Jocelyn v. Nott, 44 Conn. 55 ].”

In Cheney v. State Council of Ohio Junior Order U.A.M. (1959), 31 Ohio Law Abs. 395 , a testatrix left money to three Marion, Ohio, organizations to which her late husband had belonged. Because one cf the local organizations had gone out of existence, its statewide *233 “parent” sought the application of cy pres. The court refused, declaring, at page 398, that the testatrix had “limited the objects of her charitable bounty to certain religious and fraternal orders in Marion, Ohio.”

In Allen v. Bellefontaine (1934), 47 Ohio App. 359 , and Murr v. Youse (1946), 52 Ohio Law Abs. 321 , trusts were established to erect or utilize specific buildings and property. In Allen , a testatrix left her house, estate and grounds to a group of doctors, for meetings, research work, and a hospital. In Murr , a testator left $5,000 for the construction of a library. In neither case could the desired purpose be fulfilled. Finding no general charitable intent, in each case the court refused to apply cy pres.

Ohio courts have continued to look both to the circumstances surrounding testators, and to their will documents, in determining intent relative to the application of cy pres, without undue reverence for the fact that a charitable trust was involved. See Allen v. Bellefontaine, supra; Murr v. Youse, supra. In particular, note Heinlein v. Elyria Savings & Trust Co. (1945), 75 Ohio App. 353 , where the court stated, at page 362:

“* * * A reading of the will exhibits a clear and unqualified expressed intention to restrict his gift, and the use of particular property for a particuar, specified purpose. It was no part of his plan, in the event of the failure of the charity, which he so meticulously arranged, that that part of his estate should be used in any other manner. The purpose and intent of the testator, we believe, is not left to inference or doubt. * * * he had no secondary or broader plan.”