Case ID: ky_110/html/0923-01.html
Source: Caselaw Access Project
Author: {"author": "Chief Justice PAYNTER.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Case 108. — Agreed Case Submitting the Question Whether Plaintiffs Have Power to Borrow Money and Mortgage the Trust' Property of the Speers Hospital to Secure its Payment—
    May 17.
    Ellenherst v. Pythian, &c.
    APPEAL FROM CAMPBELL CIRCUIT COURT.
    Judgment for Plaintiffs and Defendant Appeals.
    Affirmed.
    Trusts and Trustees — Power of Court to Authorize Borrowing-of Money and Execution of Mortgage.
    Held: Under a will devising property to trustees to estabh'sh and maintain a hospital to be conducted in such manner as, in the judgment of the .trustees, will do the greatest good, and requiring the trustees to -annually report their acts to tne highest court in the county having original equitable jurisdiction, the circuit, court has power to authorize the trustees to borrow money to pay debts and make needed repairs, and to execute a mortgage on the trust property to secure its payment.
    M. HEROLD, for appellant.
    (No brief.)
    C. J. and W. W. HELM and J. C. WRIGHT, for appellees.
    Elizabeth Speers, by her will, gave the greater part of her estate “in trust for the establishment -and maintenance of a hospital in the city of Dayton in Campbell county, Ky. The said hospital to be erected, maintained and conducted in such manner and upon such plans as in the judgment of the trustees would do the greatest good.” “The trustees to annually report .all their acts and doings to the higher court in said county having original equitable jurisdiction, and all vacancies in said' -trustees shall be filled by said court.”
    The trustees, with the funds, bought land in .the city of Dayton, taking the deed to themselves, as trustees, under said w;ll, their successors and assigns, and erected a handsome building' thereon.
    The appellees succeeding to the -trustees, found the hospital in debt and needing repairs. They applied to the chancellor, laying all the facts before him and he authorized them to borrow $6,000 to pay debts, and $2,000 to make needed repairs, and to-execute a mortgage on the property to secure it. The 'appellant agreed, to loan appellees this money, and then doubting the power of the chancellor to enter said decree, and of the trustees to borrow said money and execute the mortgage, the facts were agreed on and this case presented for adjudication. Ford, &c. v. Ford, Exr., 91 Ky., 572.
   Opinion of the court by

Chief Justice PAYNTER.

Affirming.

Elizabeth L. Speers made and published her last will, in which she made many specific devises. The nineteepth •clause of the will disposes of the residue of her estate. As much of that clause of the will as is necessary to be ■ quoted reads as follows. “It is my will that my said executors! . . . convey .and transfer the entire balance of my estate, real personal, ¡and mixed, of every kind and wherever situated, . . . for the establishment and maintenance of a hospital in the city of Dayton, in Campbell county, Kentucky; the said hospital to be erected,' ■maintained, and 'conducted in such manner and upon such plan as, in their judgment, would do the greatest good. Said trustees shall annually report all their acts and doings to the highest court in said county having original equitable jurisdiction, and all vacancies in said trustees shall be filled by said court.” This action involves the interpretation of that clause of the will. The trustees orig- , in'ally appointed seem to have resigned or been removed, and the appellees, J. L. Pythian, Y. E. Senour, .and J. O. ■Jenkins substituted in their stead. The money which was paid to the trustees was .spent in the erection of a very handsome ¡and commodious hospital. Either in the •erection or management of the hospital it has become, involved in the sum of $6,000, and $2,000 more is wanted for the purpose of needed repairs. The trustees who are now acting were appointed by the Campbell Circuit 'Count, and they applied to that court to grant them permission to borrow the $8,000, and execute a mortgage upon the hospital property to secure it. The question involved on tlhis appeal is as to whether the court had the power to authorize the trustees to contract the indebtedness in question,' and execute a mortgage on the property to secure its payment. It is evident that the testatrix intended that a court of general equitable jurisdiction in Campbell county should have a supervisory power in the mianagieonent and control of the property. It would have been idle to have given to the court authority to require the trustees to execute bond for -the faithful .discharge of their duties as 'such, and to require them to make reports to the court, if it was not intended ithait it should have some control over the property and the trustees. It is the judgment iof the trustees that it is in the interest of the institution that they should be permitted to borrow money to meet its obligations and make needed improvements. Tlkeir judgment is approved by the court to which it was their duty to make reports as ito the condition of the fund or property. It would be unfortunate if there was no power anywhere to enable the trustees to relieve the institution of its preisent .embarrassment, and place it in a position where it can taire care of the sick, and thus accomplish the beneficent purpose o.f the testatrix. This is unquestionably a charitable institution. In reference to trusts which are charitable, Perry, Trusts, section 707, says: “In all these cases it is immaterial from what .source the funds that constitute the trust are derived, — whether from the bounty of individuals, the Crown, the State or Legislature. If a trust is contemplated and endowed with funds' from any source for a general public purpose, it will be regulated and controlled by a court of equity, upon proceedings instituted before it.” The circuit court provided in its order that a sinking fund should be created for the purpose of paying the interest which may accumulate on the debt, and also for the. payment of the debt. It seems to have been careful to protect the institution by requiring tbe trustees to create a fund to meet its liabilities. The institution is situated in the county in which the circuit judge resides. He is acquainted with it and the character of its trustees, and we feel it safe to follow hi® judgment as to what!is best for it.. The judgment-is affirmed.