IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Estate of Stephen Girard, Deceased :

Trust for Girard College :

: No. 2254 C.D. 2014

Appeal of: Board of Directors of City : Argued: October 7, 2015

Trusts, Trustee of the Trust under Will :

of Stephen Girard for Girard College :

BEFORE: HONORABLE DAN PELLEGRINI, President Judge1

HONORABLE ROBERT SIMPSON, Judge

HONORABLE MARY HANNAH LEAVITT, Judge2

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

OPINION

BY JUDGE SIMPSON FILED: January 21, 2016

This appeal from a final decree of the Orphans’ Court Division of the 

Court of Common Pleas of Philadelphia County (Orphans’ Court)3concerns 

proposed modifications to certain operations of Girard College, a primary and 

secondary school for disadvantaged youth operated by a charitable trust under the 

1830’s Will of Stephen Girard. After the Orphans’ Court declined to approve the 

proposed suspension of residential programs and high school grades at the College,

the City of Philadelphia, acting through the Board of Directors of City Trusts 

 

1

This case was assigned to the opinion writer on or before December 31, 2015, when 

President Judge Pellegrini assumed the status of senior judge.

2

This case was assigned to the opinion writer before January 4, 2016, when Judge 

Leavitt became President Judge.

3

The Honorable Joseph D. O’Keefe, then Administrative Judge of the Orphan’s Court 

(now retired) presided.
2

(Board), Trustee under Girard’s Will, appealed to this Court.4 After careful 

consideration, we discern no basis to disturb the thoughtful judgment of the 

Orphans’ Court; therefore, we affirm.

I. Background

A. Will

By Will and codicils dated 1830 and 1831, Girard left the majority of 

his considerable estate to charity and for the betterment of the City of Philadelphia

(City). He ordered the creation of the College, a boarding school to be located in 

the City, writing (with emphasis added):

And, whereas I have been for a long time impressed with 

the importance of educating the poor, and of placing 

them, by the early cultivation of their minds and the 

development of their moral principles, above the many 

temptations to which, through poverty and ignorance, 

they are exposed; and I am particularly desirous to 

provide for such a number of poor male white orphan 

children, as can be trained in one institution, a better 

education, as well as a more comfortable maintenance,

than they usually receive from the application of public 

funds ....

Will of Steven Girard, Ex. A to Pet. to Modify Charitable Trust for the Benefit of 

Girard College Pursuant to 20 Pa. C.S. §7740.3 (Will), Clause XX, at 10;

Reproduced Record (R.R.) at 155a. Among other provisions, Girard directed that 

the College “shall be sufficiently spacious for the residence and accommodation of 

at least three hundred scholars ....” Will, Clause XXI, at 11; R.R. at 156a 

 

4

The Board is a Commonwealth party. See City of Phila. v. Cumberland Cnty. Bd. of 

Assessment Appeals, 81 A.3d 24 (Pa. 2013). Accordingly, this Court has jurisdiction pursuant to 

42 Pa. C.S. §762(a)(1)(ii).
3

(emphasis added). The Will further requires that the students of the College be 

“fed ... clothed ... and lodged in a plain but safe manner ....” Id., Clause XXI, ¶7 

at 17; R.R. at 162a (emphasis added).

By statute, the Pennsylvania legislature created the Board in 1869. 53 

P.S. §16365.5 The Board administers trusts left to the City for charitable purposes, 

including the Will and its provisions for Girard College.

B. Petition

In 2013, the Board filed a Petition to Modify Charitable Trust for the 

Benefit of Girard College Pursuant to 20 Pa. C.S. §7740.3 (Petition). The Petition 

alleged a decline in the financial state of the Trust, specifically a decrease in the 

market value of the Residuary Fund, a decline in rental income and a dramatic fall 

in coal production. Pet. at ¶¶17-20. The Petition further alleged that 

notwithstanding economic cutbacks at the Board and Girard College levels, the 

Trust income has been insufficient to fund the financial requirements of the 

College, requiring shortfalls to be funded by the use of Trust principal. Pet. at

¶¶21-22. Under the current spending level, and without consideration of 

significant physical plant renovations that are required, the Board asserted the 

Residuary Fund would be exhausted within 25 years. Pet. at ¶¶21-26. Because 

Girard College cannot continue operating in the same manner, the Board requested 

the Orphans’ Court to temporarily modify the provisions of the Will to allow the 

elimination of the residential program and instead provide an extended day 

program for grades 1 through 8. Pet. at ¶¶26-34. The Board asserted the 

 

5 Act of June 30, 1869, P.L. 1276.
4

residential program is an administrative provision of the Will and requested the 

Orphans’ Court to temporarily modify it pursuant to the 2006 codification of rules 

for deviation from charitable trusts found at 20 Pa. C.S. §7740.3. Pet. at ¶¶36-38.

C. Parties and Hearing

Early on, the ensuing litigation focused on party status. The 

Commonwealth of Pennsylvania, Office of Attorney General, Charitable Trusts 

and Organizations Section (Office of Attorney General), became an active 

participant, generally supporting the Board’s request for deviation and opposing 

the addition/appointment of new parties. On the other hand, the Girard College 

Alumni Association was denied intervenor status (but was later permitted to 

participate as amicus curiae). In addition, the Orphans’ Court appointed James F. 

Mannion, Esq. as amicus curiae.

A hearing on the merits was held in July 2014. The evidence 

regarding past facts was not contested; however, the inferences to be drawn about 

future developments were disputed. The following summary largely reflects

Amicus Mannion’s Post Trial Filing with the Orphans’ Court.

There have been three primary sources of funding for Girard College 

over the years: 1) cash from coal and coal royalties; 2) cash generated by the real 

estate portfolio; and, 3) interest and dividends earned on the Residuary Fund. 

Notes of Testimony (N.T.), 7/17/14, at 13-16; R.R. at 258a.
5

Joseph Martz, Executive Director and Secretary of the Board, outlined 

the historical and more recent performance of the coal, real estate and Residuary 

Fund, including the long-term lease of Girard Square and the redeployment of the 

proceeds into debt reduction and joint venture real estate interests. N.T. at 19-30;

R.R. at 259a-62a. Starting in 1997, the coal operations were not generating cash 

for the Trust, and in 2007 they were losing approximately $3.3 million per year. 

N.T. at 23; R.R. at 260a. The 2008 recession negatively impacted the real estate 

operations by tenants not renewing leases, taking less space and negotiating lower 

rental rates. N.T. at 33; R.R. at 263a. The Residuary Fund was also negatively 

impacted by the recession, from a high point of $333 million in September 2007, to 

$210 million in June 2009, to a low of $197.5 million in September 2011. N.T. at 

19; R.R. at 259a; Amicus Ex. 2; R.R. at 683a.

During this time, the expenses of operating the College were 

exceeding the income generated by coal, real estate and the Residuary Fund, 

necessitating the sale of the principal of the Trust. N.T. at 47; R.R. at 266a. The 

Board significantly reduced expenses at the Board level by various steps, including 

reducing the number of students. N.T. at 39, 44-46; R.R. at 264a-66a. The Board 

also significantly reduced debt through refinancing and by using a portion of the 

proceeds of the long-term lease of Girard Square. N.T. at 30, 41-43; R.R. at 262a, 

265a; Pet’r’s Ex. 1 at 18; R.R. at 327a.

The Board was concerned about the Trust’s financial future, and it 

believed that if the financial situation continued the Trust, and in turn the College, 

would run out of money. N.T. at 51; R.R. at 267a; Pet’r’s Ex. 1 at 24-25; R.R. at 
6

333a-34a. These calculations did not include the cost of physical plant 

renovations, which were estimated to be around $3.8 million for “deficiency 

repairs” and in excess of $110 million for complete renovations. N.T. at 137; R.R. 

at 289a; Pet’r’s Ex. 1 at 22; R.R. at 331a.

The Board concluded that the only prudent way to preserve and build 

the Residuary Fund was to utilize a 6% spending rate on only the average value of 

the Residuary Fund to fund the expenses of the College, with a goal of reducing 

that to 5% and to apply the coal and real estate revenues to rebuild the Residuary 

Fund. N.T. at 49-51; R.R. at 267a. Based on financial projections, the Board 

concluded that a budget of $11.8 million for the College and $1.6 million for the 

Board could be supported under such a plan. N.T. at 55, 87-88; R.R. at 268a, 

276a.

In 2012, the Board created the “Girard College Strategic Plan Steering 

Committee” (Steering Committee). The Steering Committee reviewed options for 

the College in light of the $11.8 million budget. The Steering Committee also 

reviewed reports from outside consultants, including FSG, an architectural firm, 

the Institute for Research and Reform in Education, and the Brownstein 

Corporation. N.T. at 135-36; R.R. at 288a; Pet’r’s Ex. 1 at 3-4; R.R. at 312a-13a. 

The Steering Committee examined 13 options of keeping the residential program. 

Pet’r’s Ex. 1 at 23; R.R. at 332a. The Steering Committee concluded the 

residential program had to be temporarily suspended, and an extended day 

(concluding after an evening meal), non-residential program for grades 1 through 8 

was the most appropriate given the financial limitations and conditions of the 
7

physical plant. N.T. at 153-55; R.R. at 293a. The Board accepted the 

recommendation. Id.

Under the proposal, grades 1 through 8 would be consolidated in the 

lower school buildings, which were the newest buildings on campus. N.T. 172-73; 

R.R. at 297a-98a. Four million dollars in renovations to the lower school buildings 

would be necessary. Id.

The Steering Committee recommendation was premised upon 

educating 425 day students. N.T. at 122-25; R.R. at 285a-86a. Because of 

transportation needs, the students who would be able to attend Girard College 

would be limited geographically to those students able to get to and from the 

school in a reasonable period of time. N.T. 167-68; R.R. at 296a. No evidence 

was presented regarding the number of current students who would be able to 

attend, nor was any evidence presented of how many additional students would be 

needed to bring the number of students to 425. See id. No study was done to 

determine if there were 425 eligible students who could attend given the 

geographic restriction, although Board member Bernard Smalley testified that he 

had a high degree of certainty that number could be attained. N.T. at 170; R.R. at 

297a.

The Board also presented the “Girard College Growback Framework 

and Transition Initiatives” (Grow Back Plan). Pet’r’s Ex. 2; R.R. at 589a-624a. 

The financial aspects of the Grow Back Plan are premised upon the Residuary 

Fund reaching $350 million. Projections suggested that it would take no less than 
8

10 years to restore the Residuary Fund. Id. at 8; R.R. at 596a. No specifics of how 

the residential program would be re-implemented were provided, and the Board 

stated that it “rejects any suggestion that it should publicly announce today what 

will be sustainable and in the best interests of the Girard students of tomorrow.” 

Id. at 8-9; R.R. at 596a-97a (emphasis in original).

Changes occurred after the formation of the Steering Committee in 

2011. Coal began producing a $2 million positive cash flow, which at the time of 

the hearing was expected to continue into the future. N.T. at 70-73; R.R. at 272a73a; Amicus Ex. 1; R.R. at 682a (excerpt from Grow Back Plan). Real estate 

began producing a positive cash flow, even with the contribution of $2 million to a 

sinking fund for physical plant issues. N.T. at 72, 76; R.R. at 272a, 273a. The 

actual 2013 financial reports reflected a $3.5 million excess of revenues over 

expenses, with the $2 million sinking fund set aside. N.T. at 76; R.R. at 273a; 

Amicus Ex. 1; R.R. at 682a. The 2014 projections initially suggested a $15,000 

excess of revenues over expenses, but later the performance was expected to be $3 

million excess of revenues over expenses, even with the $2 million contribution to 

the sinking fund. N.T. at 88; R.R. at 276a; Amicus Ex. 1; R.R. at 682a.

During this time, the Residuary Fund increased in value. In 

September 2011, when the FSG report was commissioned, the Residuary Fund was 

at its lowest value of $197.6 million. N.T. at 78-79; R.R. at 274a; Amicus Ex. 2;

R.R. at 683a. By the time the Steering Committee issued its report, the value of 

the Residuary Fund increased to approximately $233 million. N.T. at 81; R.R. at 

275a; Amicus Ex. 2; R.R. at 683a. From that time to June 30, 2014, the Residuary 
9

Fund increased further to $262.2 million. N.T. 19, 79; R.R. at 259a, 274a. These 

increases in value occurred despite the use of the Residuary Fund principal in the 

past. N.T. at 84-85; R.R. at 275a-76a. These increases also reflected the reduction 

of debt service and therefore the need to utilize Residuary Fund principal. Id.

The Board called as an expert witness Howard Brownstein, a business 

turnaround consultant who authored a report attached as Exhibit A to the Report of 

the Steering Committee, Petitioners’ Exhibit 1. R.R. at 345a-57a. Mr. Brownstein 

did not agree that modification to the Girard College programs could be delayed in 

hopes that recent favorable financial trends continue. N.T. at 200-05; R.R. at 

304a-06a. Some of the questioning was conducted by the Court. Id.

One future uncertainty concerned the Trust’s rental real estate 

portfolio, especially leases in the ARAMARK Tower. The Board had 

communications with both the City (lease ending September 2016) and 

ARAMARK (lease ending September 2018) regarding lease renewals. N.T. 89-90;

R.R. at 277a. The loss of the two large leases would place the Trust’s rental real 

estate income into the negative again and place Girard College at risk. Id. More 

would be known about the City lease renewal by around July 2015, and the 

ARAMARK lease renewal by around July 2016. Id.

II. Orphans’ Court Decision

The Orphans’ Court acknowledged the legal basis for the requested 

deviation: 20 Pa. C.S. §7740.3, adopted in 2006. The provisions at issue provide:
10

(a) General rule.--Except as otherwise provided in 

subsection (b), if a particular charitable purpose becomes 

unlawful, impracticable or wasteful:

 (1) the trust does not fail, in whole or in part;

 (2) the trust property does not revert to the settlor or 

the settlor’s successors in interest; and

 (3) the court shall apply cy pres to fulfill as nearly as 

possible the settlor’s charitable intention, whether it be 

general or specific.

* * * *

(c) Administrative deviation.--A court may modify an 

administrative provision of a charitable trust to the extent 

necessary to preserve the trust.

20 Pa. C.S. §7740.3 (a), (c).

A. Administrative Provisions

The Orphans’ Court first addressed the Board’s contention that the 

proposed modifications of the Trust may be considered administrative provisions 

of the Will, subject to deviation under subsection (c). 20 Pa. C.S. §7740.3(c). The 

Court noted the distinction between administrative provisions, mechanical means 

from which deviation may be permitted to secure the more important result of

obtaining for the beneficiaries the advantages which the settlor stated he wished 

them to have, and dispositive clauses, from which deviation is not permitted under 

the subsection. Orphans’ Ct. Op. Sur Decree, 8/21/14 (Orphans’ Ct. Op.) at 14. 

Then, the Court reviewed provisions of the Will quoted above. Id.

The Orphans’ Court rejected the argument that the proposed 

modifications of operations at Girard College relate to administrative provisions of 
11

the Will. The Court stated (with emphasis by underline added, emphasis by bold 

italics in original):

Girard envisioned a boarding school that would 

both educate and provide a home for poor orphan boys. 

Stephen Girard’s direction that students were to stay at 

the college until they could be bound out as apprentices 

is likewise essential to his vision of a boarding school. 

According to Girard, students were to ‘remain in the

college until they shall respectively arrive at between 

fourteen and eighteen years of age.’ At the time it was 

common practice for overseers of the poor to apprentice 

children whose parents were unable to maintain them. 

Stephen Girard’s direction that students remain at the 

College until they could obtain an apprenticeship reflects 

the reality of the 1830s that an orphan was a child 

without a residence or family to support them. While the 

practice of apprenticeship has changed with history, the 

intended trust purpose of retaining students at Girard 

until they are able to live on their own has not changed.

Id. at 15 (footnoted citations to the Will, Clause XXI, ¶9, and to a law review 

article omitted).

B. Cy Pres

Next, the Orphans’ Court considered the application of the cy pres

doctrine, now codified in subsection (a). 20 Pa. C.S. §7740.3(a). The Court 

concluded the residential program and the high school relate to substantive 

portions, not administrative portions, of the Will. Orphans’ Ct. Op. at 15. The 

Court stated:

By the terms of his Will, Stephen Girard made clear that 

the residential program and the retention of students until 

roughly fourteen through eighteen years of age enhanced 

their educational experience. Divorcing the residential 
12

aspect of Girard College and the high school program 

from a Girard education is inconsistent with the very 

terms of the Will and the directions of the testator.

Id. at 15-16 (emphasis added).

Citing the RESTATEMENT (SECOND) OF TRUSTS §399 (1959), the 

Orphans’ Court concluded that the cy pres doctrine cannot be invoked until it is 

clearly established that the directions of the donor cannot be carried into effect. Id.

at 16. Stated otherwise, cy pres should be applied only when it is impossible, 

impracticable or illegal to carry out the terms of a charitable trust. Id. The Court 

then rejected the Board’s argument that continuing the boarding school and the 

high school is impracticable.

The Board argues that continuing the boarding 

school and the high school is impracticable. 

Significantly, the Board does not represent that the 

residential aspect of Girard or the high school are 

permanently impracticable. Rather, by its Petition the 

Board seeks to potentially revive both programs at an 

unknown later date. To support their statement of 

impracticability, the Board cites to the struggles of 

Girard’s financial resources during the last five to six 

years. But, as the Board acknowledged, all three of their 

funding sources are doing substantially better today. Due 

to this trend, for 2013, the Estate will have a positive 

cash flow of close to $3.5 million. Thus, the net cash 

available to the Estate is sufficient to cover the projected 

budget for the college for the coming year, operating 

with both a residential program and a high school. 

Indeed, it is not impracticable for the College to operate 

with a boarding school and a high school on the current 

and projected income for this year and in coming years.

Id. (emphasis added, footnoted citation to Petition omitted).
13

C. Anticipated Circumstances

Thereafter, the Orphans’ Court addressed deviations made in the past 

to meet changing circumstances, some of which were approved by the Court, and 

some of which were undertaken without Court approval. Id. at 17. Throughout all 

the changes, the Girard College residential program has been in place, dating back 

to the first class in 1848. Id.

Continuing to address changing circumstances, the Orphans’ Court 

described the historical fluctuations in the Estate’s financial stability, and the 

concomitant changes in the number of students enrolled: 

In 1831, Stephen Girard directed that at least 300 

students were to be accommodated at the college, but 

when Girard opened in 1848, the school only housed 95 

students. By 1869, the College had expanded due to the 

success of their real estate holdings, growing to 459 

students. In 1948, the student population rose to 1700 

students due to large coal royalty payments. Coal 

royalties fell off dramatically in the 1960s and 70s and by 

1985, the school shrunk to 285 students. In the 1990s, 

the rising stock market caused an increase in the value of 

the Estate’s investment portfolio and the student 

population rose once again. By 2007, there were 753 

students enrolled at Girard. In 2008 a poor real estate 

market and falling stock values would cause the Estate to 

make substantial cuts, whittling the student population to 

approximately 300 students. Through its history, the 

Board of City Trusts has continually altered the number 

of students enrolled at Girard based on the available 

income.

Id. (emphasis added).
14

Finally, the Orphans’ Court concluded that the testator anticipated

that the income available to support Girard College would fluctuate. Id. The 

Court stated:

In considering the Board’s argument of impracticability, 

it is also important to note that the testator anticipated 

that the income available to support Girard would 

fluctuate. On this point, the testator directed that the 

income of the Girard Estate was solely to be used to 

support as many students as possible at the college:

‘There are, however, some restrictions, 

which I consider it my duty to prescribe, and 

to be, amongst others, conditions on which 

my bequest for said college is made and to 

be enjoyed, namely; first, I enjoin and 

require, that, if, at the close of any year, the 

income of the fund devoted to the purposes 

of the said college shall be more than 

sufficient for the maintenance of the 

institution during that year, then the balance 

of the said income, after defraying such 

maintenance, shall be forthwith invested in 

good securities thereafter to be and remain a 

part of the capital; but in no event shall any 

part of the said capital be sold, disposed of, 

or pledged to meet the current expenses of 

the said institution, to which I devote the 

interest, income, and dividends thereof 

exclusively.’

Elsewhere in his Will Girard wrote that ‘as many poor 

male white orphans, between the ages of six and ten 

years as the said income shall be adequate to maintain, 

shall be introduced into the College as soon as possible; 

and from time to time, as there may be vacancies, or as 

increased ability from income may warrant, others shall 

be introduced.’ Girard, cognizant of the possibility that 

the income of his Estate would rise and fall, specifically 

provided that the size of Girard College would be 

determined by the income available to support it. The 
15

Will speaks for itself and establishes the settlor’s 

intention to create a boarding school for as many students 

as income would provide for the purpose.

Id. at 17-18 (emphasis added, footnoted citations to the Will, Clause XXI, ¶¶9, 4

omitted). Ultimately, the Court concluded that “[a]pplication of the cy pres

doctrine to make such fundamental changes is not justified by the current cash flow

and projected income of the Estate.” Id. at 19 (emphasis added).

Thus, the Orphans’ Court denied the Board’s Petition without 

prejudice. After denial of exceptions, appeal was taken to this Court.

III. Issues

As the appellant, the Board raises three issues for our consideration. 

First, it questions whether the Orphans’ Court erred in refusing to apply the 

doctrine of administrative deviation, codified at 20 Pa. C.S. §7740.3(c). Second, it 

asks whether the Court erred in refusing to apply the doctrine of cy pres, codified 

at 20 Pa. C.S. §7740.3(a). Third, it questions whether the financial circumstances 

confronting the Estate justify granting the requested modifications under either of 

the foregoing legal theories.

Although the Office of Attorney General supported the Board in the 

proceedings before the Orphans’ Court, its position as nominal appellee in this 

appeal is different. It frames the issue as follows: “Was the eventual denial of the 

Board’s [Petition] a reasonable exercise of judicial discretion, consistent with 

applicable law, notwithstanding the Attorney General’s general support for the 

[P]etition in the Orphans’ Court?” Br. of Appellee/Participant Commonwealth of 
16

Pennsylvania, Office of Attorney General, Charitable Trusts and Organizations 

Section, at 5.

“Our review of this case is guided by the principles that the scope of 

appellate review of a decree in equity is particularly limited and that the findings of 

the Chancellor will not be reversed unless it appears that the Chancellor clearly 

committed an abuse of discretion or an error of law.” In re Barnes Found., 684 

A.2d 123, 130 (Pa. Super. 1996) (quoting Dudash v. Dudash, 460 A.2d 323, 326 

(Pa. Super. 1983)) (internal citations omitted).

IV. Discussion

A. Administrative Provisions

1. Contentions

The Board contends the Orphans’ Court improperly refused to apply 

the doctrine of administrative deviation based on its erroneous determination that 

Girard College’s residential and high school programs are essential purposes under 

the Will. It asserts that a review of the plain language of the Will and the historical 

treatment of the College by the courts, in addition to present and evolving societal

circumstances, demonstrates that the programs are subordinate and ancillary to 

Stephen Girard’s dominant and primary purpose of maintaining an institution for 

the education of disadvantaged children in perpetuity.

The Office of Attorney General contends there are no grounds to 

reverse the Orphans’ Court. The Court had to make an independent determination, 

and it was not bound by the position taken below by the Office of Attorney 
17

General. As the Orphans’ Court found, administrative deviation was not warranted 

because what the Board proposed would impermissibly remake the Girard Trust, 

which always contemplated a boarding school.

The Girard College Alumni Association (Alumni Association), as 

amicus curiae, reminds us that Stephen Girard’s vision, to educate disadvantaged 

children in supervised residence until graduation into a productive life, was 

distinctive for its time. The Alumni Association asserts that to dilute that vision by 

substitution of non-residential day schooling only to the eighth grade, even if 

temporarily and even if offered to more students, would transgress Mr. Girard's 

primary purpose and diffuse that beneficence. The Alumni Association urges this

Court to consider the Board’s long-term forecasts as speculative, and affirm the 

Orphans’ Court decree, which was entered without prejudice for future 

consideration of proposals.

2. Analysis

As now codified at 20 Pa. C.S. § 7740.3(c), the rule of administrative 

deviation is: “A court may modify an administrative provision of a charitable trust 

to the extent necessary to preserve the trust.” The phrase “administrative 

provision” is not further defined.

A leading Pennsylvania case on the doctrine of administrative 

deviation is In re Barnes Foundation, which was decided before the codification of 

20 Pa. C.S. §7740.3(c) in 2006. In Barnes Foundation the Superior Court quoted 

RESTATEMENT (SECOND) OF TRUSTS §381 (1959) (“Deviation from Terms of the 
18

Trust”). The Court also relied on a learned treatise to define administrative 

provisions subject to deviation as “the details of administration which the settlor 

has prescribed in order to secure the more important result of obtaining for the 

beneficiaries the advantages which the settlor stated he wished them to have.” 

Barnes Found., 684 A.2d at 130 (quoting GEORGE GLEASON BOGERT & GEORGE 

TAYLOR BOGERT, THE LAW OF TRUSTS AND TRUSTEES §561 at 27). The Court 

emphasized that “deviation is not based on mere convenience, but on the necessity 

of effecting a change in a situation where compliance with the terms of the trust 

‘would defeat or substantially impair the accomplishment of the purpose of the 

trust.’” Id. at 130-31 (quoting Colin McK. Grant Home v. Medlock, 349 S.E.2d 

655, 659 (S.C. Ct. App. 1986)).

In his important law review article, Administrative and Dispositive 

Powers in Trust and Tax Law; Toward a Realistic Approach, 36 U. Fla. L. Rev. 

957 (1984), Professor Martin D. Begleiter offered a concrete distinction between 

administrative and dispositive provisions. He defined an administrative provision 

or power as one that concerns the management of property, is incidental to the 

substantive terms of the transfer, and is not directly substantive. Id. at 958-59. 

The definition would include investment powers, powers to appoint successor 

fiduciaries in inter vivos trusts, powers to sell, lease or mortgage, powers to hold 

separate shares in solido and to hold property in bearer form, powers to collect and 

pay debts and taxes, powers to make tax elections, clauses relieving the trustee of 

liability, and similar management clauses. Id. at 959 n.6. In contrast, a dispositive 

power or provision directly affects the substantive provisions of the trust, primarily 

those provisions identifying the beneficiaries and setting forth their interests. Id. at 
19

959. The theme of Professor Begleiter’s work is that deviation is permissible only 

if it does not affect the beneficiaries’ interests. Id. at 1001.6

Under either the Superior Court’s definition of administrative 

provisions in Barnes Foundation, or Professor Begleiter’s definition, we discern no 

error in the Orphans’ Court’s resolution of this issue. Relying on references to 

providing “maintenance,” “residence” and “lodging” in Will Clauses XX and XXI, 

quoted near the beginning of this opinion, the Orphans’ Court properly concluded 

 

6

In addition, Professor Begleiter traced the development of the administrative deviation 

doctrine from an 1862 case out of Illinois, Curtiss v. Brown, 29 Ill. 201 (1862), to more recent 

decisions. He discerned an interesting trend:

The doctrine of deviation began as a narrow emergency doctrine 

developed by necessity to prevent the failure of a trust. Originally 

it focused on the needs of the beneficiary or the possible reduction 

in the trust corpus as to the extent that the trust assets became 

practically worthless. The focus gradually changed to what the 

court believed to be the testator’s dispositive plan. Later, the 

doctrine was expanded to include cases where a serious 

impairment of value of one asset of the trust existed, though the 

trust corpus remained of great value and no need or burden on the 

beneficiaries was proven. Even the stated purpose of the testator 

could be ignored.

Recent cases have focused on changed circumstances, not 

of the trust, but of national economic conditions. The trust need 

not have declined in value, nor need the property be unproductive 

to invoke deviation. Courts require only a change in national or 

world-wide economic conditions threatening the purchasing power 

of the trust’s assets. Absent from these decisions is any detailed 

inquiry into the testator’s purpose. ... Deviation from 

administrative provisions has therefore become a broad doctrine, 

though occasionally tempered by some requirement of need by the 

beneficiaries or impairment of the trust assets.

Martin D. Begleiter, Administrative and Dispositive Powers in Trust and Tax Law; Toward a 

Realistic Approach, 36 U. Fla. L. Rev. 957, 969 (1984) (footnotes omitted).
20

that the residential program at Girard College did not involve a non-substantive 

detail of administration. Further, the Orphans’ Court was justified in concluding 

that Will references to “residence” and “lodging” encompass provisions of the 

Trust setting forth part of the beneficiaries’ interests, and as such, are dispositive 

provisions.

Similarly, the Orphans’ Court properly concluded that the high school 

grades did not involve a non-substantive detail of administration. The Court 

quoted Will Clause XXI, ¶9, to support its conclusion that Girard’s intended trust 

purpose was “of retaining students at Girard until they are able to live on their own

....” Orphans’ Ct. Op. at 15. Because we agree that this Will provision identifies

part of the beneficiaries’ interests, rather than some detail of management, no error 

is evident.

The Board’s reliance on past modifications does not compel a 

different result. The Orphans’ Court correctly disposed of this argument by noting 

that one modification was made without Court approval (2009 suspension of 

weekend residential program), and other modifications related to constitutional 

questions (admission of girls and minorities). See Orphans’ Ct. Op. at 17.

Nevertheless, the residential program remained in place since the College’s first 

class in 1848. Id. Under these circumstances, we agree with the Orphans’ Court 

that past modifications do not control the current controversy.
21

B. Cy Pres

1. Contentions

The Board also contends the Orphans’ Court erred by denying

modification under the doctrine of cy pres. It asserts the fundamental purpose of 

Stephen Girard – the maintenance of an educational institution for children of 

lesser means – is threatened by existing financial circumstances. The purpose of 

the Will has clearly become impractical and, unless addressed now, that purpose 

will be ultimately frustrated. If modifications are not permitted, the Residuary 

Fund, the primary source of revenue to support the College, will be depleted. The 

Orphans’ Court’s myopic focus on “this year” or the “coming years” was error and 

did not acknowledge the cy pres doctrine. According to the Board, a decision on 

modification cannot be deferred, and the Court abused its discretion in doing so.

The Office of Attorney General counters that cy pres relief was not 

warranted because the College’s residential and high school programs were not 

“impracticable” given recent promising financial trends. In essence, the Board 

asked for a cy pres remedy preemptively, out of concern that Girard College’s 

complicated and unquestionably precarious financial situation may deteriorate. 

But, the Orphans’ Court has wide discretion, and it is not obligated to grant cy pres

relief at the first whiff of trouble. Moreover, there is not necessarily such a thing 

as “temporary” cy pres.

The Alumni Association claims that the Board did not provide 

sufficient evidence that cy pres is applicable here. The Alumni Association 

highlights that the College continues to operate, changes in operations were made 
22

and further changes can be made, and financial conditions have improved. It 

asserts that the proposed modifications are more a matter of the trustee’s 

convenience than a necessity at this time.

2. Analysis

As now codified at 20 Pa. C.S. §7740.3(a), the doctrine of cy pres is, 

in pertinent part: “if a particular charitable purpose becomes unlawful, 

impracticable or wasteful ... the court shall apply cy pres to fulfill as nearly as 

possible the settlor’s charitable intention, whether it be general or specific.”

The Orphans’ Court determined that, given more recent financial 

trends, “the net cash available to the Estate is sufficient to cover the projected 

budget for the college for the coming year, operating with both a residential 

program and a high school. Indeed, it is not impracticable to operate with a 

boarding school and a high school on the current and projected income for this 

year and in coming years.” Orphans’ Ct. Op. at 16 (emphasis added).

For several reasons, we discern neither error nor abuse of discretion in 

the determination of no current impracticability. First, as discussed in the previous 

section, we see no error in the Orphans’ Court’s determination that, based on 

express terms in the Will, both a residential program and a high school program 

were important parts of Stephen Girard’s charitable gift. The Court properly 

rejected the Board’s too-broad definition of intent as an “educational institution for 

children of lesser means.”
23

Second, it was well within the Orphans’ Court’s discretion to give 

promising near-term financial projections greater weight than the dire long-term 

predictions offered by the Board. This is especially true where the Court tempered 

its resolution by permitting future application for modification. In the absence of 

binding authority limiting the Orphans’ Court’s broad discretion in similar 

circumstances, we decline to interfere with its judgment.

C. Anticipated Circumstances

1. Contentions

Further, the Board assigns error in the Orphans’ Court’s focus on the 

financial evidence of “this year” and “coming years.” The Board contends that the 

issue before the Court was not whether the Estate had sufficient funds to operate 

with a boarding school and high school for one or two years, but rather, whether 

the Estate will have sufficient financial resources to operate Girard College in 

perpetuity, as Stephen Girard desired. By limiting the scope of its review to 2013 

and 2014, the Orphans’ Court failed to appreciate the critical financial challenges 

facing the Estate that inevitably will lead to an inability to continue operating the 

College as an educational institution. This limited review was error, according to 

the Board.

The Board contends that in particular, the Orphans’ Court failed to 

account for necessary infrastructure improvements, failed to account for the 

additional $1 million contributed to the sinking fund beginning in 2015, failed to 

account for the likelihood and impact of tenancy loss at ARAMARK Tower, failed 

to account for an increase in capital expenditures for properties held in the Estate’s 
24

real estate portfolio, and improperly ignored Brownstein’s testimony and report. 

The Board urges that the record supports the requested modifications as the means 

of preserving Girard College going forward.

The Office of Attorney General points out that the Board’s argument 

on this last issue is unsupported by any legal authority and amounts to a lengthy 

critique of how the Orphans’ Court weighed, analyzed and interpreted the 

evidence. Nevertheless, the Court did its job. It is apparent from the Orphans’ 

Court’s opinion that it read the court filings, listened to the hearing witnesses, 

reviewed the documentary evidence, and arrived at a reasoned conclusion, based 

upon the entire record. That is all any litigant can expect.

The Office of Attorney General also reminds us that the Orphans’ 

Court concluded, more or less along the lines of Amicus Mannion’s position, that it 

would be appropriate to continue monitoring the situation with Girard College for 

at least a while longer. By denying the Petition without prejudice, the Court left 

the door open to revisiting the Board’s concerns should seemingly promising 

financial trends not endure. That was a thoughtful, judicious approach.

The Alumni Association argues that the Orphans’ Court applied the 

required scrutiny through its court-appointed amicus and in its independent 

analysis of the record. The Court found the proposed modifications to be 

misguided in view of the Will and in view of the information supplied by the 

Board. Beyond that, the precedents that the Board seeks to set regarding the 

doctrines of administrative deviation and cy pres exceed current law. Mere long-
25

term projections and speculation, even based upon expert opinion, should not 

become the basis for a present application of these doctrines.

2. Analysis

RESTATEMENT (SECOND) OF TRUSTS Section 381 (1959), entitled 

“Deviation from Terms of the Trust,” provides (with emphasis added):

The court will direct or permit the trustee of a 

charitable trust to deviate from a term of the trust if it 

appears to the court that compliance is impossible or 

illegal, or that owing to circumstances not known to 

the settlor and not anticipated by him compliance 

would defeat or substantially impair the 

accomplishment of the purposes of the trust.

“In order to permit deviations from the administrative terms of a trust, courts 

generally require the presence of two elements: ‘(1) unforeseen and unforeseeable 

change of circumstances, and (2) a frustration of the settlor’s main objectives by 

this change, if strict obedience to the settlor[’s] directions were required.’” Barnes 

Found., 684 A.2d at 130 (quoting GEORGE GLEASON BOGERT & GEORGE TAYLOR 

BOGERT, THE LAW OF TRUSTS AND TRUSTEES §561 at 230) (emphasis added).

Such was the existing law of Pennsylvania prior to the adoption of 20 

Pa. C.S. §7740.3, entitled “Charitable Trusts – UTC 413.” This provision is 

similar to Section 413 of the Uniform Trust Code (2000). See 20 Pa. C.S. §7740.3,

Historical and Statutory Notes. Indeed, the Joint State Government Committee

Comment to the Section states, “Subsection (c) [“Administrative deviation”] 

codifies existing Pennsylvania law.” 20 Pa. C.S. §7740.3, Jt. St. Gov.t Comm. 

Comment—2005.
26

For context, RESTATEMENT (THIRD) OF TRUSTS Section 66(1) (2003),

entitled “Power of Court to Modify: Unanticipated Circumstances,” covers similar

material and provides (with emphasis added):

 

(1) The court may modify an administrative or 

distributive provision of a trust, or direct or permit 

the trustee to deviate from an administrative or 

distributive provision, if because of circumstances 

not anticipated by the settlor the modification or 

deviation will further the purposes of the trust.

Thus, under the RESTATEMENT (THIRD) Section 66(1), the so-called “equitable 

deviation” doctrine, a court may modify both administrative and distributive 

provisions. See id., cmt., subsection (1). Further, the stated rule does not require 

changed circumstances; rather, it is sufficient that the settlor was unaware of the 

circumstances in establishing the terms of the trust. Id.

Here, the Orphans’ Court determined that “the testator anticipated that 

the income available to support Girard would fluctuate.” Orphans’ Ct. Op. at 17.

Further, the Court stated, “Girard, cognizant of the possibility that the income of 

his Estate would rise and fall, specifically provided that the size of Girard College 

would be determined by the income available to support it.” Id. at 18. The Court 

relied on the Will, Clause XXI, ¶¶ 4, 9. Id. This finding of anticipated 

circumstances, supported by terms of the Will, precludes deviation under 

RESTATEMENT (SECOND) OR RESTATEMENT (THIRD) OF TRUSTS. The Board makes 

no legal argument to the contrary.

Given the finding of anticipated circumstances, the Board’s factheavy, law-light argument on the Orphans’ Court’s short-term financial focus 
27

cannot support a reversal, regardless of whether the programs in question pertain to 

administrative or distributive aspects of the Will. Similarly, given the Court’s 

determination of no current impracticability (discussed above), the doctrine of cy 

pres will not support reversal.

Nevertheless, we carefully examined the Board’s factual arguments. 

We conclude that they lack merit. Contrary to the Board’s contentions, the 

Orphans’ Court considered the cost of infrastructure improvements, Orphans’ Ct 

Op. at 9, and of additional contributions to the sinking fund, id. at 10 n.57.

Further, the Court was clearly aware of the possible future tenancy 

loss/substantial tenant improvements at ARAMARK Tower. See N.T. at 203-04;

R.R. at 305a (testimony of Brownstein, colloquy with Court). See also N.T., 

10/30/14 at 24-28; R.R. at 732a-33a (argument on exceptions, colloquy with 

Court); Post Trial Filing of James F. Mannion, Amicus Curiae, at 7; R.R. at 712a.

Similarly, the Court was well aware of Howard Brownstein’s expert opinion that

the Board should not wait to implement the proposed modifications. N.T. at 200-

05; R.R. at 304a-06a (testimony of Brownstein, colloquy with Court). Regarding 

these future uncertainties for the real estate portfolio, the Orphans’ Court was 

obviously, and consistently, skeptical about the scenarios as presented by the 

Board. Thus, as to these points, the record supports the Court’s conscious decision 

not to afford great weight to the Board’s evidence.
28

V. Conclusion

Like the Orphans’ Court, this Court commends the Board for 

beginning to confront the myriad of financial, educational and institutional 

challenges currently facing Girard College. See Orphans’ Ct. Op. at 19.

Nevertheless, we discern no legal or factual basis to disturb the considered

judgment of the Orphans’ Court; therefore, we affirm.

 

ROBERT SIMPSON, Judge

Judge Brobson did not participate in the decision in this case.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Estate of Stephen Girard, Deceased :

Trust for Girard College :

: No. 2254 C.D. 2014

Appeal of: Board of Directors of City :

Trusts, Trustee of the Trust under Will :

of Stephen Girard for Girard College :

O R D E R

AND NOW, this 21st day of January, 2016, the Final Decree of the 

Orphans’ Court Division of the Court of Common Pleas of Philadelphia County, 

dated November 14, 2014, dismissing exceptions and affirming the Decree of 

August 21, 2014, is hereby AFFIRMED.

 

ROBERT SIMPSON, Judge