Case Title: In re Trust of Brooke

Citation: 1998-Ohio-185

Docket Number: 19971089

State: ohio

Court: Ohio Supreme Court

Date: 1998-08-12T00:00:00Z

Document:
IN THE MATTER OF THE TRUST U/W OF BROOKE ET AL., DECEASED. 
[Cite as In re Trust of Brooke (1998), ___ Ohio St.3d ___.] 
Trusts — Language of charitable trusts where residents of the city of Eaton are 
beneficiaries, construed. 
(No. 97-1089 — Submitted April 7, 1998 — Decided August 12, 1998.) 
APPEAL from the Court of Appeals for Preble County, No. CA96-10-017. 
 
In 1942, two sisters, Mary G. Brooke and Edith L. Gould, executed their last 
wills and testaments.  Under the terms of both wills, trusts were established, which 
became active in 1968, following the death of Harold Brooke Ressler, a relative of 
both sisters.  Item 6, part 7 of the Brooke will provides: 
 
“After the death of the survivor of said Harold Brooke Ressler and Edith L. 
Gould, my said Trustee shall, from time to time, in his sole discretion, but in no 
event at greater intervals than 20 year periods after the death of such survivor, give 
the net income from my entire trust estate to the Village of Eaton, Preble County, 
Ohio, for such Worthy Legal Municipal Purpose or Purposes as said Trustee may 
deem advisable and for something which will be of a substantial and permanent 
nature and be a benefit to said Village, and which gift shall be known as ‘The 
Gould-Brooke Memorial’ or some similar title which will tend to perpetuate the 
name of Gould and/or Brooke.” 
 
The language of the Gould will is identical to that in the Brooke will, except 
that the name “Mary G. Brooke” replaces the name “Edith L. Gould.”  The trust 
appoints a trustee and provides that the president of the Eaton National Bank, 
Eaton, Ohio, shall serve as trustee following the death of the original appointee.  
The appellant, Jeffrey A. Maffett, is the third trustee appointed to administer the 
trusts since their inception. 
 
2
 
After the trusts became active, four distributions were made from the trusts.  
In 1973, two citizens organized a group to develop plans and raise funds for the 
construction of a new library in Eaton.  The citizens sought financial support from 
the Brooke and Gould trusts, and the trustee at that time, Thurston F. Bittle, agreed 
to support the project with funds from the trust, if other funds could be secured 
with community contributions.  Subsequently, the citizens sought the support of 
the residents of the city of Eaton and the Eaton City Council for the project. 
 
The city council supported the project by establishing a fund to deposit 
private contributions for the project, by submitting a joint application with the 
Preble County Board of Library Trustees for available federal funds, and by 
allowing the library to be built on city-owned land.  In 1975, following the 
completion of the library and the naming of it as the “Brooke-Gould Memorial 
Library,” funds from the trusts were distributed to support the project. 
 
A second distribution of funds from the trusts occurred in 1984 for the 
purpose of supporting an expansion to the library.  The distribution was again 
conditioned on the receipt of other funds raised from the community.  The most 
recent distributions were made for the purpose of supporting construction of a new 
emergency medical services facility, and for the construction of a new high school. 
 
In 1994, the current trustee, Maffett, filed an application with the Preble 
County Court of Common Pleas, Probate Division, to amend both trusts for the 
purposes of acquiring tax-exempt status under Section 501(c)(3) of the Internal 
Revenue Code and to “verify that there are no other beneficiaries of the Trust 
other than the City of Eaton, and to clarify the distribution provisions of the 
Trust.”  The trial court approved the amendments to the trusts, which provide, in 
pertinent part, as follows: 
 
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“1.  Distribution.  The Trustee shall, from time to time, distribute such part 
of the net income and/or principal of the Trust for such charitable and/or worthy 
legal municipal purpose or purposes for the City of Eaton as the Trustee may deem 
advisable and appropriate in the Trustee’s sole discretion.  Particularly with 
respect to distributions of principal, the Trustee shall give emphasis to 
distributions that will result in something which will be of a substantial and 
permanent nature for the City of Eaton.  * * * ” 
 
The trial court also determined that the “ultimate ‘beneficiaries’ are the 
citizens of the ‘Village’ (now City) of Eaton.” 
 
On November 16, 1994, just prior to the filing of the application for 
amendments to the trusts, the mayor of Eaton, on behalf of the city council, wrote 
the trustee, requesting his approval for a distribution of funds to construct a new 
municipal building for the city.  The trustee responded in writing, noting that he 
would consider the request along with others under consideration.  On February 
14, 1995, after the approval of the trial court of the proposed amendments to the 
trusts, counsel for the city wrote to the trustee.  The city again called for the trustee 
to distribute the trust funds to the city for the building project, claiming that the 
trustee’s consideration of any other requests for trust funds would conflict with the 
terms of the trust.  In response, counsel for the trustee stated that the “sole 
discretion” granted to the trustee by the terms of the trust did not require the 
trustee to distribute funds to the city simply by virtue of its request. 
 
The city, appellee, then filed a motion pursuant to Civ. R. 60(B) for relief 
from the order of the trial court amending the trusts.  Following settlement 
discussions, the parties agreed to amend the trusts by merging them and providing 
as follows: 
 
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“1.  Distribution.  The Trustee shall, from time to time, in his sole 
discretion, but in no event at greater intervals than twenty year periods after the 
death of Harold Brooke Ressler (i.e. 1968), give the net income of the entire 
Brooke/Gould Trust to the City of Eaton, Preble County, Ohio, for such worthy 
legal municipal purpose or purposes as the Trustee may deem advisable and for 
something which will be of a substantial and permanent nature and be a benefit to 
said City, which gift shall be known as ‘The Brooke-Gould Memorial’ or some 
similar title which will tend to perpetuate the name of Gould and/or Brooke.  
Notwithstanding the above, the Trustee shall make all distributions in compliance 
with all applicable laws and regulations, including but not limited to Section 4942 
of the Internal Revenue Code of 1986 as amended (‘Code’) or any successor 
section of the Code and any regulations promulgated thereunder.  Accordingly, the 
Brooke/Gould Trust is organized exclusively for charitable, religious, educational 
or scientific purposes, including for such purposes, the making of distributions to 
the City of Eaton, a governmental unit described in Section 170(b)(1)(A)(v) of the 
Code.” 
 
The agreement did not determine the issue of who was intended to be the 
beneficiary of the trusts. 
 
Upon a subsequent motion requesting a declaration of the rights of the city 
under the trust, the trial court determined that “the City of Eaton * * * is not the 
‘sole beneficiary’ under the Trusts * * *.  [Emphasis sic.]  Rather, the community 
of residents in the more broad or generic sense is/are the beneficiaries of the 
Trusts.”  The trial court added, “the word ‘Village’ means the community of 
residents.  Had the Settlors intended to leave the income of the Trusts to the 
‘governmental entity’ there would be no reason to grant the Trustee the authority 
 
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to control the distribution of the income and determine proper purpose(s) for the 
use of that income.” 
 
The trial court also found that the city was not the designee for creating and 
developing plans for uses of the income because the language of the trust 
expressly reserved that function to the trustee.  Finally, the trial court denied the 
city’s application for attorney fees. 
 
The city appealed to the Preble County Court of Appeals.  The court of 
appeals reversed the judgment of the trial court.  The court of appeals determined 
that the word “Village” as used in the trusts meant the “legal entity” of the 
municipality and the residents of the city.  The appellate court also determined that 
the city was the only entity intended to expend the trust income to fulfill any plans 
for uses of the trust. 
 
The cause is now before this court pursuant to the allowance of a 
discretionary appeal. 
__________________ 
 
Thompson, Hine & Flory L.L.P., Laurie J. Nicholson and Richard F. 
Carlile, for appellant. 
 
Porter, Wright, Morris & Arthur and Jonathan Hollingsworth, for appellee. 
 
Leppla & Ambrose Associates, Ltd., and R. Mark Henry, urging reversal for 
amicus curiae, Concerned Eaton Citizens. 
__________________ 
 
MOYER, C.J.  This dispute arises from a declaratory judgment action 
brought to construe certain language contained in two trusts of which the appellant 
is the trustee.1  For the reasons that follow, we hold that the trusts grant exclusive 
power to the trustee to control and distribute the net income from the trust, subject 
to the requirements for distribution as stated in the trusts.  We also hold that the 
 
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words of the trusts indicate that the net income from the trusts is to be expended 
on behalf of the residents of Eaton, Ohio, for a use that the trustee, exclusively, 
determines to be a worthy legal municipal purpose, so long as that purpose is of a 
substantial and permanent nature, benefits the residents of Eaton, and perpetuates 
the name of the settlors in some way.  Accordingly, we reverse the judgment of the 
court of appeals. 
 
When construing provisions of a trust, our primary duty is to “ascertain, 
within the bounds of the law, the intent of the * * * settlor.”  Domo v. McCarthy 
(1993), 66 Ohio St.3d 312, 314, 612 N.E.2d 706, 708.  The express language of 
the trust guides the court in determining the intentions of the settlor.  Casey v. 
Gallagher (1967), 11 Ohio St.2d 42, 40 O.O.2d 55, 227 N.E.2d 801.  Any words 
used in the trust are presumed to be used according to their common, ordinary 
meaning.  Albright v. Albright  (1927), 116 Ohio St. 668, 157 N.E. 760. 
 
Applying those principles to the trusts at issue, it is evident that these trusts 
are charitable trusts.  The language of the trusts indicates that the benefits of the 
trusts are “intangible advantages to the public or to some significant class thereof 
which improve its condition mentally, morally, physically, or in some similar 
manner.”  Bogert, Trusts & Trustees (2 Ed. Rev.1991) 19-20, Section 362.  
Additionally, it is clear that the money paid out of the trusts is “not for the 
personal benefit of the donees, but rather to secure for society certain advantages.”  
Id. at 20.  Indeed, no party disputes that Edith Gould and Mary Brooke clearly 
contemplated that the use of their trusts would inure to the public benefit.2 
POWERS OF THE TRUSTEE 
 
The powers and duties of a trustee are determined by the terms of the trust.  
Daloia v. Franciscan Health Sys. (1997), 79 Ohio St.3d 98, 102, 679 N.E.2d 1084, 
1089.  Applied to the trusts in dispute, the words conferring power to the trustee 
 
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give to the trustee “sole discretion” in distributing the net income.  The trusts also 
state that distributions are to be made for a “Worthy Legal Municipal Purpose or 
Purposes” as “said Trustee may deem advisable.”  (Emphasis added.)  Thus, the 
words of the trusts plainly allow the trustee, solely, to determine when and for 
what purposes monies shall be distributed from the trust.  The words “sole 
discretion,” taken in their common and ordinary meaning, are clear and 
unambiguous.  By the use of those words, the settlors clearly intended that the 
trustee be the lone decisionmaker in determining both the timing and the purpose 
of trust distributions. 
 
However, the trustee must also fulfill certain duties in making distributions 
under the terms of the trusts.  In exercising his or her discretion, the trustee must 
comply with the standards guiding the timing and use of the distributions as also 
set forth in the language of the trusts.  The trusts require the trustee, in exercising 
his discretionary power, to make a distribution of the net income at least every 
twenty years “[a]fter the death of * * * Harold Brooke Ressler.”  The trusts require 
that any distribution of income from the trusts must be for a purpose that is of a 
“substantial and permanent nature and be a benefit to said Village,” and perpetuate 
the names of the settlors in some way.  Thus, any distribution must be used for a 
purpose that achieves a meaningful, lasting benefit for the community. 
 
The trusts also provide that the trustee shall make each distribution for 
“such Worthy Legal Municipal Purpose or Purposes as said Trustee may deem 
advisable.”  The city interprets the trustee’s power to determine “worthy legal 
municipal purpose” by stating,  “[t]he settlors intended to have the governmental 
entity, through its elected officials, i.e. City Council, select the use or uses for the 
income earned by the Trusts, while the Trustee, presumably a respected member of 
the business community, would operate as a non-partisan advisor to the City with 
 
8
ultimate authority to determine whether the Trusts’ income was being used for a 
‘Worthy Legal Municipal Purpose.’ ”  (Emphasis added.)  We cannot agree. 
 
We recognize that the city council may be perceived as an appropriate entity 
in determining how funds can be applied for the common good of the community, 
but as settlors of their trusts, Mary Brooke and Edith Gould could reasonably have 
held a different view.  A plain reading of the language of the trusts indicates that 
the trusts confer “sole discretion” on the trustee and the power to make 
distributions for such worthy municipal purposes “as said Trustee may deem 
advisable.”  The common meaning of these terms used by the settlors can only 
suggest that the trustee has lone decisionmaking power over the timing and 
purpose of distributions, subject to the standards established in the remaining 
language of the trusts.  The language of the trusts does not give the city any 
authority in the administration of these trusts. 
 
Further, the city’s position is internally inconsistent.  The city states that the 
trustee is confined to serving as a “non-partisan advisor to the City with ultimate 
authority to determine whether the Trusts’ income was being used for a ‘Worthy 
Legal Municipal Purpose.’ ”  By this statement, the city suggests that the trustee 
may only advise the city on its uses of the trusts’ income, but that somehow the 
trustee retains “ultimate authority” to determine the propriety of the use, after a 
distribution has been made. 
 
This view by the city cannot be reconciled with the language of the trusts.  
The trusts state, “[the] Trustee shall * * * give the net income * * * for such 
Worthy Legal Municipal Purpose or Purposes as said Trustee may deem 
advisable.”  (Emphasis added.)  The word “shall” is a verb used to indicate simple 
future time.  Webster’s Third New International Dictionary (1986) 2085.  The 
language “as said Trustee may deem advisable” confirms the discretionary power 
 
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of the trustee to assure that funds will be used for a worthy legal municipal 
purpose.  The trustee, duly authorized to carry out the wishes of the settlors, may 
determine what proposed uses best meet those wishes.  By the use of the word 
“shall,” as well as a plain reading of the trusts, it is evident that the settlors clearly 
intended for the trustee to make this determination in advance of any distribution.  
Such an intention is sensible in light of the duty of any trustee to ensure that the 
interests of a settlor or settlors are protected prior to any distribution of funds.3 
 
The language “as said Trustee may deem advisable” clearly allows the 
trustee to make distributions for uses which the trustee, in the trustee’s discretion, 
determines to be of a worthy legal municipal purpose.  In extending this 
decisionmaking authority to the trustee, the settlors delegated, to the trustee, the 
determination of what constitutes such a purpose, subject to the worded limitations 
specified by the settlors.  Further, we note the definition of “municipal purposes,” 
as found in Black’s Law Dictionary (6 Ed.1990) 1018:  “Public or governmental 
purposes as distinguished from private purposes.  It may comprehend all activities 
essential to the health, morals, protection, and welfare of the municipality.”  This 
definition is broad.  It does not limit the trustee to purposes as determined or 
defined as “municipal” by the local government of Eaton.  Rather, a proper 
purpose may be any proposal, public in nature, such that it benefits the community 
in its entirety, is of a “substantial and permanent nature,” and perpetuates the name 
of the settlors in some way. 
BENEFICIARIES OF THE TRUST 
 
The court of appeals determined that the plain and unambiguous language 
of the trusts indicates that the phrase “ ‘Village of Eaton, Preble County, Ohio’ 
means the legal entity of the city and the residents of the city.  In this manner, the 
 
10
city is not the sole beneficiary under the trusts, but a co-beneficiary with the 
residents of the city.”  We disagree. 
 
The trusts’ language, when taken in its ordinary and common meaning, and 
when viewed within the context of the other provisions of the trusts, suggests that 
it was not the intent of the settlors to give beneficiary status to a governmental 
entity.  The trusts’ language states that the trustee shall give the net income “to the 
Village of Eaton, Preble County, Ohio.”  Black’s Law Dictionary at 1569 provides 
as follows, “[t]raditionally, word ‘village’ has connoted an area possessed of some 
attributes of a community, and is not a technical word, or one having a peculiar 
meaning, but is a common word in general usage and is merely an assemblage or 
community of people, a nucleus or cluster for residential and business purposes, a 
collective body of inhabitants, gathered together in one group.  * * * [I]n some 
states, this is the legal description of municipal corporations of smaller population 
than ‘cities’ * * *.” 
 
The city accepts this definition, but points to the capitalization of the word 
“village” in the trusts in contending that the court of appeals was correct.  The city 
makes a reasonable argument.  However, we consider the city’s reliance on the 
capitalization of “village” to be of little importance, in view of the numerous 
common words also capitalized in the trusts.4 
 
Additionally, basic trust law and a reading of the trust instruments do not 
support this view.  First, the trusts provide that a community leader (a local bank 
president), not an elected official, shall serve as trustee.  The trusts then grant sole 
authority to make distributions from the trusts for uses that the trustee deems to be 
of a worthy legal municipal purpose.  As stated earlier, the trusts do not provide 
the local government with any role in that decisionmaking process.  Further, the 
trusts’ language clearly contemplates a use on behalf of all community residents 
 
11
by providing that any use shall be “of a substantial and permanent nature and be a 
benefit to said Village.”  These provisions of the trusts make it unlike those trusts 
where the municipal corporation serves as the trustee, or those trusts where monies 
are designated for a specific use.  See Bogert, Trusts & Trustees (2 Ed. Rev.1992) 
437, Section 328, and Bogert (1991), at 193, Section 378.  Rather, the language of 
these trusts demonstrates the intention of the settlors to establish an instrument for 
the benefit of the community.  A respected community member (the local bank 
president) shall determine proper public uses for the benefit of the community, and 
then distribute funds to the entity responsible for financing such a use.  That entity 
may or may not be a governmental entity. 
 
Beneficiaries of charitable trusts are often not specifically determinable.  
“[N]ot only is a charitable trust permitted by law to have vague, undefined, 
uncertain beneficiaries, but * * * it is required to have such beneficiaries; and * * 
* the very essence of a charitable or public trust lies in the indefiniteness of the 
charitable trust beneficiaries.”  Bogert (1991), at 26, Section 363.  The public or 
the community is the “real beneficiary of every charitable trust,” while “particular 
human beings who are the mere conduits of the social benefits to the public” are 
not.  Id. at 27. 
 
The consequences of adopting the city’s view are aptly illustrated by the 
record.  In 1995, the Eaton School Board requested support from the trusts to 
support the construction of a new high school.  The trustee agreed to support the 
project.  In a letter to the trustee dated December 20, 1995, the city apparently 
adopted the position that the trusts were created to benefit only the local 
government.  Referring to the school project, the city stated, “We very much 
concur that such a project  is important to the community,” but added that “we 
have concerns as to whether educating students is, indeed, a municipal purpose 
 
12
and it seems clear to us that the trust funds are intended to specifically benefit the 
City of Eaton.”  (Emphasis added.)  (In the same letter, the city requested money to 
fund a new emergency medical services building.)  The city has argued that 
because it was not involved in the school project and “did not receive the funds 
pledged by the Trusts, * * * the Trustee’s pledges are inconsistent with the express 
language of the Trusts.” 
 
We believe, however, that the trustee’s decision to support a project for the 
children of Eaton is consistent with the language of the trusts.  The language of the 
trusts clearly indicates that the trustee has power to determine when and how the 
trusts’ funds shall be used, subject to the standards as noted earlier. The city may 
propose uses for the trusts’ funds, but it cannot make the ultimate decision 
regarding the use of those funds, nor can it interfere with distributions that are not 
made to entities of city government. 
 
Our analysis of the law and the trusts’ language causes us to conclude that 
the true beneficiaries are the residents of Eaton.  Residents who come into contact 
with the uses of the trust funds (for example, by visiting the library) are the 
“conduits of the social benefits” conferred by the trusts to the residents. The city 
government, in its legal form as a municipal corporation, is but one possible agent 
by which the benefits of the trust funds are procured.  “[I]t is more accurate to say 
that the real beneficiary is the public or community and the persons involved are 
merely instrumentalities through which the community benefits flow.” Bogert 
(1991), at 28, Section 363.  The trustee must abide by the standards of the trust in 
exercising his power, i.e., that funds be distributed only for a worthy legal 
municipal purpose, that the use or uses be of a substantial and permanent nature 
and a benefit to the community, and that the gift perpetuate the name of the 
settlors in some way. 
 
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CONCLUSION 
 
For the foregoing reasons, the court of appeals erred in determining the city 
to be a co-beneficiary of the trusts, and in concluding that the city government is 
the sole entity intended to receive and expend the funds of the trusts.  The trustee 
has sole authority, prior to distributing funds to any entity, to ensure that funds 
will be used for a worthy legal municipal purpose.  The trustee may make this 
determination based upon any proposals submitted to him.  The trusts do not grant 
the city council any authority to select the use for the funds, nor is city council the 
only entity that may submit proposals to the trustee for distribution of trust funds.  
A distribution may be made to any entity so long as the purpose for which funds 
are expended complies with the standards established in the trusts. 
 
We further conclude that the court of appeals erred by determining that the 
trial court erred in failing to award attorney fees to the city. 
 
Accordingly, we reverse the judgment of the court of appeals and reinstate 
the judgment of the trial court as modified by this opinion. 
Judgment reversed. 
 
DOUGLAS, RESNICK, F.E. SWEENEY and LUNDBERG STRATTON, JJ., concur. 
 
PFEIFER and COOK, JJ., dissent. 
FOOTNOTES: 
1. 
Unless otherwise stated, we refer to the language of the original trusts as 
established by the settlors throughout. 
2. 
That these trusts are charitable is also demonstrated by the amendment to 
the language of the now merged trust, which states that the trust is “organized 
exclusively for charitable * * * purposes.” 
 
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3. 
The city’s contention that it has power to select the uses for the trust funds 
is also inconsistent with the history of the original distribution.  A citizens group, 
not the city, proposed the library project, and the trustee agreed to support it. 
4. 
E.g., “Worthy,” “Legal,” “Municipal,” “Purpose,” “Purposes,” and 
“Trustee.” 
__________________ 
 
COOK, J., dissenting.  I would affirm the judgment of the court of appeals. 
 
The majority reads the trust phrase “in his sole discretion” as applying to 
both the timing and the purpose of distributions from the trust.  I depart from the 
court on this point.  Instead, I read the phrase as applying only to the timing of 
distributions.  The phrase is positioned between two timing restrictions.  It reads, 
“[the] Trustee shall, from time to time, in his sole discretion, but in no event at 
greater intervals than 20 year periods after the death of such survivor, give the net 
income * * *.”  The use of the preposition “but” supports this view, as “but” 
signals a restriction on the discretion conferred and thereby limits the phrase from 
being applicable to the rest of the sentence.  “Sole discretion” in this trust means 
only that the trustee has sole discretion to choose when to make distributions, but 
this exclusive discretion is bounded by the requirement that the trustee distribute 
the net income at least once every twenty years. 
 
I concede that the importance of this distinction is minimized by the trust 
language conferring broad powers on the trustee over the purposes of trust 
distributions through the trust language, “as said Trustee may deem advisable.” 
 
I also respectfully disagree with the majority on its conclusion that the trust 
language makes the residents of the city the sole beneficiaries of the trust.  Rather, 
I concur with the contrary conclusion of the court of appeals.  It held that the city 
is the only entity intended to receive and expend the trust income to fulfill trust 
 
15
purposes deemed advisable by the trustee.  The choice of the words “Municipal 
Purpose[s]” rather than “Public Purpose(s),” coupled with the designation that the 
trustee “give * * * to the Village,” supports this construction.  The city is the 
logical conduit to receive and pass along funds given to benefit its residents. 
 
PFEIFER, J., concurs in the foregoing dissenting opinion.