Title: Farmers and Merchants Bank v. Woolf

State: new-mexico

Issuer: New Mexico Supreme Court

Document:

523 P.2d 1346 (1974) 86 N.M. 320 FARMERS AND MERCHANTS BANK, Plaintiff-Appellee, v. Dale WOOLF, Administrator with Will Annexed of the Estate of Gordon Vance Jones, Deceased, Defendant-Appellant. No. 9830. Supreme Court of New Mexico. July 3, 1974. George A. Graham, Jr., Truth or Consequences, for defendant-appellant. R.C. Garland, Las Cruces, John L. Hill, Atty. Gen. of Tex., Martha Smiley, Asst. Atty. Gen., Austin, Tex., for plaintiff-appellee. MONTOYA, Justice. The plaintiff-trustee (trustee), Farmers and Merchants Bank of Las Cruces, New Mexico, filed this action for declaratory judgment to determine the rights of the parties involved in a trust estate. From a judgment awarding the balance of the trust estate of Mabel Evelyn Jones (testatrix) to the Alcoholics Foundation of San Antonio, Texas (Foundation), Dale Woolf (Woolf), the administrator with will annexed of the estate of Gordon Vance Jones brings this appeal. The testatrix was a resident and domiciliary of Tucson, Arizona, at the time of her death in September 1969. After making specific bequests to named beneficiaries, her will provided in part: In November 1970, Gordon Vance Jones died. He was the sole and only heir at law of the testatrix. Woolf was appointed administrator with will annexed of his estate. The trial court found that Alcoholics Anonymous was an unincorporated association located in the State of Texas, having no legal entity or authority to receive gifts and bequests and, therefore, incapable of accepting the bequest of the testatrix. In September 1971, the Foundation was organized as a charitable entity pursuant to the laws of the State of Texas. The trial court found that by the terms of its trust agreement the Foundation was established for the exclusive purpose of establishing and maintaining charitable rehabilitation centers for persons unable to consume alcoholic beverages in moderation. The court further found that the expressed purpose of the last will and testament of the testatrix was to create a charitable trust for the benefit and rehabilitation of alcoholics, and that there is no public policy or general rule of law preventing the carrying out of this expressed desire of the testatrix and, therefore, that the doctrine of cy pres or approximation applied to the case. It further found that the bequest had not lapsed, that the Foundation was the legal entity approximating the fulfillment of the expressed desires of the will of the testatrix and, accordingly, the Foundation was entitled to receive the remainder of the assets held by the trustee. Appellant Woolf, under four points, contends the court erred as follows: (1) In holding that the law of the domicile of the testatrix (Arizona) was not controlling as to the disposition of her estate, which consisted entirely of personal property; (2) in ruling that the testatrix made a charitable gift and that the doctrine of cy pres was applicable to such gift; (3) that the actions of Woolf amounted to a contest of the will of testatrix and, therefore, violated the "in terrorem" clause of testatrix's will; (4) in determining that the Foundation was a duly organized charitable entity under the laws of the State of Texas and legally capable of receiving gifts and bequests, and which was created to aid the court to carry out the intentions of testatrix as set out in her will. We first consider which law governs the disposition of the trust property. The testatrix was domiciled in Arizona and the main probate proceeding was held there. Ancillary probate proceedings were completed by the Dona Ana County Probate *1348 Court, since the funds involved in the trust were in the custody of the trustee in New Mexico. The legatee of the trust property is organized under the laws of the State of Texas, and the administration of the trust will also be in the State of Texas. Under Restatement, Second, Conflict of Laws, Ch. 10 Trusts, § 269 at 152-153, it is stated: Since the testatrix did not designate what law was to govern the validity of the trust, the provisions of § 269(b)(ii), supra, would apply. In the commentary to the foregoing section in Restatement, supra, the following appears in comment (h) at 157: In Fletcher v. Safe Deposit & Trust Co., 193 Md. 400, 410-411, 67 A.2d 386, 390 (Ct.App. 1949), in considering the question of the applicable law to determine the validity of a trust estate, the court stated: See also 16 Am.Jur.2d Conflict of Laws, § 59 at 92-93. Accordingly, we hold that the trial court did not err as claimed by Woolf under his first point. We next discuss the contentions that no charitable gift was made and that the court erred in holding the cy pres doctrine was applicable. We also consider the contention that the Foundation was a duly organized charitable entity capable of receiving the bequest in question. The trial court concluded: Specifically answering the question as to whether the bequest was a charitable one, in Santa Fe Lodge No. 460 v. Employment Security Com'n, 49 N.M. 149, 154, 159 P.2d 312, 315 (1945), we said: This above quoted definition of a charity given by Mr. Justice Gray in Jackson v. Phillips, 14 Allen (96 Mass.) 539 (1867), was also quoted with approval by the Texas Supreme Court when considering the validity of a charitable trust in the case of Boyd v. Frost Nat. Bank, 145 Tex. 206, 196 S.W.2d 497, 502 (1946). Then in the case of In re Mills' Will, 57 N.M. 577, 580, 260 P.2d 1111, 1113 (1953), in upholding a charitable bequest to "deformed and crippled children" we said: With respect to the cy pres doctrine and its applicability in the State of Texas, the acceptance of the cy pres doctrine or the doctrine of approximation was discussed in Jones' Unknown Heirs v. Dorchester, 224 S.W. 596, 604-605 (Tex. Civ.App. 1920), where the court stated: Next we consider whether Alcoholics Foundation of San Antonio, Texas, was a legally organized charitable entity *1350 and legally capable of receiving the bequest in question. The testatrix named Alcoholics Anonymous of San Antonio, Texas, as the legatee to carry out the charitable purposes stated in her will. The trial court correctly found that Alcoholics Anonymous was only an association in the State of Texas, was not a legal entity and had no authority to receive the bequest. The question next arises is whether the legacy should then lapse. We believe that the application of the doctrine of cy pres or approximation prevents that. Again, applying the law of the State of Texas, we find support for the trial court's action in ruling that the Foundation was legally capable of accepting the bequest. In Taysum v. El Paso Nat. Bank, 256 S.W.2d 172, 176 (Tex.Civ.App. 1952), the court, in considering among other things whether a trust would fail for lack of a trustee when a public charitable trust was created by a will, said: The foregoing also answers the contention that the bequest lapsed because the Foundation was not in existence at the date the provisions of the will of the testatrix were to take effect. The action of the trial court in applying the cy pres doctrine and preventing the lapse of the bequest does not offend the public policy of the State of Arizona, even though we have held that Texas law is to be applied, and neither does it run counter to the public policy in either New Mexico or Texas. The Arizona Supreme Court in the case of In re Estate of Harber, 99 Ariz. 323, 326, 409 P.2d 31, 33 (1965), said: In dealing with charitable bequests, the Arizona Court of Appeals, in the case of In re Estate of Daley, 6 Ariz. App. 443, 448, 433 P.2d 296, 301, (Ct.App. 1967), said the following: Furthermore, a review of the stated purposes of Alcoholics Anonymous and the Foundation indicates that their aims were to serve alcoholics, to help them stay sober, and to help others achieve sobriety through care and treatment of those persons unable to consume alcoholic beverages in moderation. The cases cited by Woolf in support of his contentions are distinguishable and not applicable in principle to the facts in this case, as there is no mixed bequest which would enable the trustee to apply the bequest to other than charitable purposes. Here we have a bequest made directly to a charity, which was incapable of accepting the gift, and the application of the cy pres doctrine, or that of approximation, effectuates the intent of the testatrix and the funds should be made available to the trustee of the Foundation to be used in furtherance of their charitable purposes. If there is any failure to do so, the Attorney General of Texas is charged with the responsibility under Texas law of stepping in and asking the courts for proper relief. Coffee v. William Marsh Rice University, 403 S.W.2d 340 (Tex. 1966). Because of the disposition we have made, it is deemed unnecessary to consider *1351 the effect of the "in terrorem" clause in the will. Accordingly, in view of all of the foregoing, the judgment of the trial court is affirmed. It is so ordered. McMANUS, C.J., and OMAN, J., concur.