Case Name: William D. Stewart, Appellant, v. Leopoldo Franchetti, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1915-05-07
Citations: 15 Mills Surr. 81
Docket Number: 
Parties: William D. Stewart, Appellant, v. Leopoldo Franchetti, Respondent.
Judges: 
Reporter: Mills' Surrogate's Reports
Volume: 15
Pages: 81–88

Head Matter:
William D. Stewart, Appellant, v. Leopoldo Franchetti, Respondent.
(Supreme Court, Appellate Division, First Department,
May 7, 1915.)
Will—Trust fob charitable purposes—Beneficiaries may be indefinite—Decree declaring invalidity of trust entered after death OF TRUSTEE-WHEN EXECUTION OF TRUST DEVOLVES UPON SUPREME COURT —When trust estate does not revert to creator on misapplication OF FUNDS BY TRUSTEE.
Where a testator in .bequeathing a share of his residuary estate declared that it was understood between him and the legatee that she was to expend the - amount “ in charity, both in the Kingdom of Italy and in the City of New York,” there was a valid charitable trust created.
Under the present provisions of the Personal Property Law, charitable trusts are no longer invalid by reason of the indefiniteness or uncertainty of the persons designated as beneficiaries, and in the trust aforesaid the decision as to who shall be the recipient of the charity is left to the discretion of the trustee.
Where the trustee having legal title dies, the execution of the trust devolves upon the Supreme Court.
A decree of the Surrogate’s Court declaring that a trust for charitable purposes is invalid is absolutely void as to the trustee and as to all persons claiming under her, and may be attacked collaterally, if the decree was not entered until after the death of the trustee.
It follows that where a decree declaring the invalidity of the charitable trust aforesaid is void, being entered after the death of the trustee so that the execution of the trust has devolved upon the Supreme Court, the assignee of one of the residuary legatees under the will creating the trust has no standing to maintain an action to recover the trust property, which he alleges has not been devoted to charitable purposes. This, because in the absence of an express provision to that effect, there is no reversion to the estate of the creator of the trust even though the trustee be guilty of a breach of trust.
Appeal by the plaintiff, William D. Stewart, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 14th day of December, 1914, dismissing the third amended complaint upon the decision of the court sustaining a demurrer thereto, and also from the order made at the New York Special Term and entered in said clerk’s office on the 10th day of December, 1914, which sustained the demurrer to the third amended complaint, and pursuant to which the judgment was entered.
Allen S. Wrenn, for the appellant.
Lewis L. Delafield (Julius Goldman with him on the brief), for the respondent.

Opinion:
McLaughlin, J.
The defendant demurred to the third amended complaint and then moved, under section 547 of the Code of Civil Procedure, for judgment on the pleadings. The demurrer was sustained and the motion granted. Plaintiff appeals.
The action is for money had and received. The facts alleged in the complaint are substantially as follows: That on or about October 5, 1909, the will of Julia Hallgarten and a codicil thereto were admitted to probate by the Surrogate's Court of the county of Hew York and letters testamentary issued to the executors therein named; that by the terms of the will the residuary estate was bequeathed, in equal shares, to her two daughters, Alice, who subsequently married the defendant Eranchetti, and Eleanor, who married one von Koppenfels; that the codicil contained the following provision: " I give,
devise and bequeath the amount which had been bequeathed to me by the last will and testament of.my son Walter H. Hallgarten, to my daughter Alice Hallgarten Eranchetti, it being understood between us that she has to spend said amount in charity, both in the Kingdom of Italy and in the City of Hew York, H. Y., U. S. A.; " that on or about December 15, 1911, in a proceeding in the Surrogate's Court of the county of Hew York, a decree was entered adjudging, among other things, that the bequest contained in the codicil was void, and that the money ineffectually attempted to be bequeathed thereby passed to the residuary legatees under the will; that Alice Hallgarten Franchetti was originally a party to the proceeding and filed an instrument waiving the issuance of a citation, and consenting to the judicial settlement of the executors' account; that she died on October 22, 1911, nearly two months prior to the entry of the decree; that in December, 1910, the attorneys for the executors wrote Eleanor Hallgarten that a question had arisen as to the validity of the trust declared in the codicil of Julia Hallgarten's will and asked her wishes in the event that it should be declared by the surrogate to be invalid, in reply to which she wrote: " I wish my mother's intention carried out even if the Surrogate should decide that the trust is invalid; " that the bequest contained in the codicil amounted to $98,337.11, of which, under the surrogate's decree, Eleanor Hallgarten and Alice Franchetti, as residuary legatees, were each entitled to one-half thereof, or $49,168.55; and that on March 28, 1911, the executors, relying upon the above statement in the letter of Eleanor Hallgarten, paid to Alice Franchetti the entire sum of $98,337.13. The complaint then alleges " That the said sum of $49,368.55, to which the said Eleanor Hallgarten von Koppenfels was entitled, as aforesaid, was paid to and received by said Alice Franchetti without consideration, and upon condition that the same should be by her expended in charity, both in the Kingdom of Italy and in the City of Hew York, H. Y., IT. S. A.; " that Alice Franchetti, after the receipt of said sum, invested the same in interest-bearing bonds and caused the same to be removed from the State of Hew York and from the Hnit-ed States; that she has failed and neglected to perform the condition upon which said sum was paid to her in that she has failed and neglected to expend any part of said moneys so received and invested by her in charity, either in the kingdom of Italy or in the city of Hew York; that she died on the 22d of October, 3911, and at the time of her death still had in her possession all of said moneys which, had been so invested; that the executors of the will of Julia Hallgarten claim that their responsibility for said moneys ceased and ended upon said payment, and by a decree of the Surrogate's Court of the county of Hew York after the payment was made, in a proceeding for the judicial settlement of their accounts, they were relieved and discharged from all further liability for said moneys; that after the death of Alice Franchetti, the defendant Leopoldo Franchetti took possession of said securities and caused a substantial amount of the same to be sold and the proceeds reinvested; that after the death of Alice, Eleanor Hallgarten von Koppenfels demanded of defendant payment to her of the sum of $49,168.55, no part of which has been paid; that prior to the commencement of the action all her right, title and interest in and to the same were assigned to the plaintiff; that by reason of the facts stated, defendant is indebted to the plaintiff in the sum of $49,168.55, for which, together with the interest thereon, judgment is demanded.
The principal question presented for our determination is whether a valid trust was created in the codicil to Julia Hallgarten's will, and in this connection it is contended by the appellant that that question is not open for consideration, since the decree of the Surrogate's Court determined to the contrary, and it cannot be attacked collaterally. That decree, according to the allegations • of the complaint, was not entered until December 15, 1911, about two months after the death of Alice Franchetti, and, therefore, as to all persons claiming through her, is void. (Code Civ. Proc. § 765; Id. § 3347, subd. 6; Requa v. Holmes, 16 N. Y. 193; Carolan v. O'Donnell, 141 App. Div. 463.)
Considering the question then as an original one, I am of the opinion that a valid charitable trust was created. The development of the law relating to charitable trusts in this State since the passage of the Tilden Act, so called (Laws of 1893, chap. 701, as amd. by Laws of 1901, chap. 291; now Pers. Prop. Law [Consol. Laws, chap. 41; Laws of 1909, chap. 45], § 12, as amd. by Laws of 1909, chap. 144, and Laws of 1911, chap. 220; Real Prop. Law [Consol. Laws, chap. 50; Laws of 1909, chap. 52], § 113, as amd. by Laws of 1909, chap 144), has been so frequently considered by the courts, that a further review seems almost unnecessary. Under this act charitable trusts are no longer invalid by reason of the indefiniteness or uncertainty of the persons designated as beneficiaries. Thus, in Matter of Robinson (203 N. Y. 380) the court sustained a trust which directed the trustees to disburse the principal or interest of the residuary estate of a testatrix, or both, in their discretion, " To provide shelter, necessaries of life, education, general or specific, and such other financial aid as may seem to them fitting and proper to such persons as they shall select as being in need of the same. Preference is to be given to persons who are elderly or disabled from work, and to persons who are Christians, of good moral character, members of one of the so-called evangelical churches, to wit, the Methodist, Baptist, Presbyterian, Congregational, Moravian or Episcopal, and who are not addicted to the use of intoxicants or tobacco, nor to attendance at theatrical entertainments. "
In Matter of Cunningham (206 N. Y. 601) the testator bequeathed $5,000 to his executors " to be by them applied in their best judgment and discretion to such charitable and benevolent associations and institutions of learning for the general uses and purposes of such associations and institutions as my said executors may select, and in such sums respectively as they may deem proper." In sustaining the trust, Bartlett, J., who delivered the opinion of the court, said: " A considerable number of English cases might be cited in which the purpose of the charitable trust which received the sanction of the court was quite as indefinite. I shall refer to only a few of them. In Moggridge v. Thackwell (7 Vesey, 36b, 85) Ann Cain gave her residuary personal estate to her executor, ' desiring him to dispose of the same in such charities as he shall think fit, recommending poor clergymen who have large families and good characters-; ' and Lord Eldox affirmed the decree of Lord Thublow who had held that the trust was sufficiently definite to be executed by the court. In Legge v. Asgill (Turner & Russell, 265, note) the testatrix made a number of bequests in her will, and executed a codicil providing: " If there is money left unemployed, I desire it may be given in charity.' It was held that this was an effective gift of £2,000 of personal estate to charitable purposes. In Whicker v. Hume (7 House of Lords Cases, 124, 154) there was a bequest of personal property 'upon trust to apply and appropriate the same in such manner as the said trustees or trustee shall, in their absolute and uncontrolled discretion, think proper and expedient for the benefit, and advancement and propagation of education and learning in every part of the world.' It was objected that the gift was of such an extensive nature that it was impossible to carry it into effect; but Lord Chelmsfobd held that the purpose of the testator was to promote teaching and instruction, and the circumstance that the whole habitable world was open to the discretion of the trustees did not prevent the gift from being available as a good charitable bequest."
In Matter of Miller (149 App. Div. 113) this court held, where the income of a trust fund was directed to be expended for scholarships to be granted, " first to the sons of poor clergymen in France intending to become ministers of the gospel, as may desire the same, and secondly, in the absence of such, to any poor young men wishing to become ministers of the gospel or missionaries," that the trust was valid and could be enforced. (See, also, Buell v. Gardner, 83 Misc. Rep. 513, where a trust created for the benefit of " institutions and persons who may be worthy, needy and deserving of the same," was held good. And Utica Trust & Deposit Co. v. Thomson, 87 Misc. Rep. 31, where the income of a trust fund was directed to be paid yearly " to such charity or charitable institutions as shall be designated by and agreed upon by any three of said trustees.")
The language used in the codicil in creating the trust under consideration is no more indefinite than in some at least of the authorities cited. The amount given was to be spent in charity. That is clear. The purpose of the statute was to validate gifts or bequests where the beneficiaries were indefinite and uncertain. Here all that is uncertain is as to who shall be the recipient of the charity, and that necessarily must be left to the discretion of the trustees.
Matter of Shattuck (193 N. Y. 446), upon which the appellant principally relies, is not, as I read it, an authority for holding that the trust is void for indefiniteness of purpose; on the contrary, it seems to me an authority to the effect that the trust here created is valid. Judge Chase, who delivered the opinion, said: " The act of 1893 doubtless saves a trust from being invalid because the beneficiaries are indefinite and uncertain, but a trust may be so indefinite and uncertain in its purposes as distinguished from its beneficiaries as to be impracticable, if not impossible, for the courts to administer." It was there held that the purpose for which the trust was designed was not, necessarily, charitable. This clearly appears from a statement in the opinion in Matter of Cunningham (supra). Judge Bartlett said: " Inasmuch as it was possible, under the terms of the Shattuck trust, that it might be devoted in whole or in part to private use, the entire gift was pronounced invalid."
If the trust be valid the plaintiff, as the assignee, has no-interest therein, and the same result follows if the trust created, by the will were disregarded and the money sought to be recovered were given to Alice Franchetti by her sister upon condition that she expend the same in the charity alleged. It is well settled that when a valid charitable trust is created, without provision for a reversion, the interest of the donor is permanently excluded. In the absence of such a provision the title to the property does not revert to the donor or his representatives. This rule was restated in Associate Alumni v. Theological Seminary (163 N. Y. 417), Judge Cullen, who delivered the opinion of the court, saying: " The general rule is ' if the trustees of a charity abuse the trust, misemploy the charity fund, or commit a breach of the trust, the property does not revert to the heir or legal representative of the donor, unless there is an express condition of the gift that it shall revert to the donor or his heirs, in case the trust is abused; but the redress is by bill or information by the Attorney-General or other person having the right to sue.' (2 Perry on Trusts, § 744 ; Sanderson v. White, 18 Pickering, 328; Vidal v. Girard's Executors, 2 Howard [U. S.], 191; Mills v. Davison, 54 N. J. Eq. 659.)" (See, also, 2 Story Eq. Juris. [13th ed.] § 1177; Potter v. Chapin, 6 Paige, 639.)
If it be true, therefore, as contended, that there has been a misuse of the trust fund, that would not entitle the donor, or in the case at bar the assignee of one of her residuary legatees, to the return of the fund. The legal title was in the trustee and, she having died, the execution of the trust devolves upon the Supreme Court (Allen v. Stevens, 161 N. Y. 122; Matter of Griffin, 167 id. 71) which carries the same into effect by a trustee appointed by it. The plaintiff has no standing to maintain such action, since he has no interest in the fund or the enforcement of the trust.
It follows, therefore, that the order and judgment appealed from should be affirmed, with costs.
Ing-baham, P. J., Laughlin, Dowling and Hotchkiss, JJ., concurred.
Judgment and order affirmed, with costs.
See 2d ed.— [Rep.