Case Name: IN RE ESTATE OF ELIZABETH C. QUINLAN. STATE v. WILLIAM LAHIFF AND OTHERS
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1951-01-26
Citations: 233 Minn. 35
Docket Number: No. 35,165
Parties: IN RE ESTATE OF ELIZABETH C. QUINLAN. STATE v. WILLIAM LAHIFF AND OTHERS.
Judges: Mr; Justice Christianson, not having been a member of the court at the time of the argument and submission, took no part in the consideration or decision of this case.
Reporter: Minnesota Reports
Volume: 233
Pages: 35–62

Head Matter:
IN RE ESTATE OF ELIZABETH C. QUINLAN. STATE v. WILLIAM LAHIFF AND OTHERS.
January 26, 1951.
No. 35,165.
Kelly & Goilman, for appellants.
J. A. A. Burnquist, Attorney General, and Joseph S. Ahdnor, Special Assistant Attorney General, for the State.
Reported in 45 N. W. (2d) 807.

Opinion:
Matson, Justice.
Appeal from an order denying a new trial after a determination by the district court that a certain transfer of property made pursuant to a bequest and devise by Elizabeth C. Quinlan to The Elizabeth C. Quinlan Foundation, Inc., is subject to the inheritance tax imposed by M. S. A. c. 291.
Appellants, who are the executors of decedent's will, contend that the bequest is exclusively for a charitable purpose and is therefore exempt from inheritance taxation under § 291.05.
Elizabeth C. Quinlan, through her lawyer, arranged for the incorporation of The Elizabeth C. Quinlan Foundation, Inc. (hereinafter called the Foundation) pursuant to articles of incorporation dated November 26, 1945, wherein she was designated as president and as a member of the board of trustees. The preamble to the articles recites that the purpose was to establish a charitable corporation pursuant to E. L. 1905, § 3102 (now § 309.01). Paragraph II of the articles, however, provides:
"The general purposes of this corporation shall be as follows:
"1. To render financial assistance to worthy religious, educational, scientific, medical, surgical, social or charitable organizations operating within the State of Minnesota.
"2. To render financial assistance to needy individuals residing within the State of Minnesota for their advancement and assistance in religious, educational, scientific, medical, surgical, social or charitable work or study.
"3. To promote and carry out under its own name projects or enterprises of a religious, educational, scientific, medical, surgical, social or charitable nature such projects or enterprises to be carried on within the State of Minnesota." (Italics supplied.)
Paragraph IV of the articles further provides that the corporation—
"shall not divert any gift, grant, devise or bequest from the specific purpose or purposes designated by the donor, without the consent of such donor;
The decedent, on December 21, 1945, less than a month after she had signed the aforesaid articles of incorporation, executed her last will and testament. She died on September 15, 1947. By Article II of her will, she bequeathed and devised her Minneapolis residence and its contents — after granting a life estate to her sister, who, however, predeceased her — to the Foundation for any purpose within the general purposes of the Foundation. Following the devise of her residence are a number of other bequests, including a gift of a substantial part of her residuary estate to the Foundation. With respect to all property given to the Foundation, she provided in Article Y, Section 8:
"All such part of my estate as may herein be devised or bequeathed to The Elizabeth C. Quinlan Foundation, Inc., shall be devoted by it to the furtherance of its general objects and purposes. The Board of Trustees of said corporation shall have u/n-restricted power to dispose of all, or any part, of the property herein devised or bequeathed to said corporation, both the income therefrom and the principal thereof, for the promotion of any religious, educational, scientific, medical, surgical, social or charitable activity or activities within the powers and purposes of sand corporation.
"If at any time the Board of Trustees shall come to the conclusion that the general objects and purposes for which said Foundation is organized, and for which the devises and bequests herein given to said corporation are made, may be more practically and effectively achieved through some other agency or agencies (of similar charitable nature), said Board may transfer all such assets as may then remain to any such other agency or agencies selected by it, to be held, used or disposed of by such transferee agency or agencies in such manner as said Board of Trustees shall direct at the time of any such transfer or transfers." (Italics supplied.)
Under a partial decree of distribution, the Hennepin county probate court assigned decedent's residential property to the Foundation as exempt from all inheritance taxes. Respondent, through its commissioner of taxation, appealed to the district court, which found that the Foundation does not come within the meaning of § 291.05, which exempts from inheritance taxation—
"Any devise, bequest, gift, or transfer to or for the use of any corporation, fund, foundation, trust, or association operated for religious, charitable, scientific, literary, education, or public cemetery purposes exclusively,
Respondent contends that the words "medical," "surgical," and "social," as used m the "general purposes" clause of the Foundation's articles of incorporation, permit the Foundation to engage in activities which are not exclusively charitable and that therefore it does not qualify for tax exemption as a charitable corporation within the meaning of § 291.05.
Unnecessary difficulty in the consideration of this case stems from the unwarranted assumption that decedent's bequest to the Foundation cannot possibly qualify for tax exemption unless the Foundation is a purely charitable corporation. This assumption wholly overlooks the possibility that a construction of her will as a whole in the light of the surrounding circumstances may disclose an intent not to make an outright gift, but a gift in trust for exclusively charitable purposes. In ascertaining whether a charitable trust has been created, we must not overlook the fundamental change in the policy of this jurisdiction with respect to charitable trusts beginning with the enactment of L. 1927, c. 180 (now § 501.12). This statute reinstated charitable trusts to a position similar to the favored one they enjoyed at common law. By legislative mandate, charitable trusts are not only valid, but must be given a liberal construction. § 501.12; In re Estate of Lundquist, 193 Minn. 474, 259 N. W. 9; In re Estate of Peterson, 202 Minn. 31, 277 N. W. 529; 14 Minn. L. Rev. 587; 23 Minn. L. Rev. 670; 2 Bogert, Trusts and Trustees, § 322, pp. 1025-1026. See, Longcor v. City of Red Wing, 206 Minn. 627, 289 N. W. 570. In the light of this legislative mandate, it is neither desirable nor proper to follow the strained reasoning of our earlier decisions, which were born of an effort to sustain charitable gifts when charitable trusts were unauthorized. This court has already recognized the desirability of adopting a more natural construction in keeping with the intent of the donor by holding that a gift to a charitable corporation, although in the form of an outright gift, in the absence of express language to the contrary, is in purpose and practical effect a charitable trust. In the Peterson case we said (202 Minn. 36, 277 N. W. 532):
In form these are direct gifts to named beneficiaries, each of which is a charitable activity, an institution established and functioning solely for such purposes. In consequence, we hold, in line with many courts, that a devise or bequest, although in form an outright gift, yet when made to an institution whose sole reason for existence and whose entire activity is charitable, is in purpose and practical effect a charitable trust."
If the intention to create a charitable trust may be inferred from little more than the circumstances that a bequest — which is in the form of an outright gift — is made to an organization whose sole reason for existence and whose entire activity is charitable, does it-not follow that we have a much stronger basis for supporting an intent to create a trust — even though the recipient of the bequest is not, strictly speaking, a charitable corporation— where such intent is disclosed by the very language of the donor's will?
We come to a construction of decedent's will. If we wholly disregard the second paragraph of Article V, Section 8, in the absence of a determination that the Foundation is a purely charitable corporation, it would indeed be difficult to come to any other conclusion than that testatrix intended to make an outright gift to the Foundation for its general purposes and not a gift in trust. We are not, however, at liberty to ignore any part of the will. The primary rule of construction is that the intent of the testatrix, as expressed in the language of the will, is to be gathered from everything contained within its four corners, as read in the light of the surrounding circumstances. In the second or concluding paragraph of Article V, Section 8, testatrix expressly provided that if the Foundation's board of trustees should come to the conclusion that the general objects and purposes for which the Foundation was organized, "and for which the devises and bequests herein given to said corporations are made, may be more practically and effectively achieved through some other agency or agencies (of similar charitable nature)" (italics supplied), said board should have the right to make a transfer of the assets so devised and bequeathed to such other agency or agencies. What is the significance of the words "of similar charitable nature"? They manifest an unmistakable intent that the gift to the Foundation for its general purposes was not •absolute, but was qualified by the imposition upon the Foundation and its officers of a fiduciary or equitable duty to use the gift only for such purposes of the Foundation as should be exclusively charitable. The language used in the earlier parts of the will imports an absolute gift, but it is not controlling. In construing a will containing inconsistent provisions, the language first used has no greater significance than the language later used; but, if explanatory or qualifying later language indicates that a different meaning was intended by the testatrix, the literal or technical meaning of the language first used should be disregarded, and the intention of the testatrix, as revealed by the will as a whole, must prevail. Board of Directors of City Trusts v. Maloney, 78 App. D. C. 371, 141 F. (2d) 275.
Less than a month prior to the making of her will, testatrix had been the moving spirit in incorporating the Foundation. Undoubtedly she knew that the articles of incorporation (paragraph IY) specified that no gift, devise, or bequest could be diverted from the specific purposes designated by the donor. In the light of this knowledge, testatrix, who was an able and experienced businesswoman, no doubt anticipated that, with changing conditions, it might become desirable to administer her gift through some other agency. In making provision for a possible transfer of what she had bequeathed and devised to another agency, her use of the words "of similar charitable nature" is significant, and such words should be given their full and natural meaning. Obviously, her gift was m trust for charitable purposes, although she did not expressly use the word trust. No special language is needed to express an intent to create a charitable trust. In re Estate of Anderson, 148 Minn. 44, 180 N. W. 1019; 3 Scott, Trusts, § 351; 2 Bogert, Trusts and Trustees, § 369. We have here all the elements necessary for the creation of a charitable trust within the meaning of the following definition found in Restatement, Trusts, § 348:
"A charitable trust is a fiduciary relationship with respect to property arising as a result of a manifestation of an intention to create it, and subjecting the person by whom the property is held to equitable duties to deal with the property for a charitable purpose."
See, Estate of Rowell, 248 Wis. 520, 22 N. W. (2d) 604. In ascertaining the existence of a testamentary charitable trust, we said in In re Estate of Peterson, 202 Minn. 31, 37, 277 N. W. 529, 533:
"To carry out the intention of testatrix is the 'one controlling factor. It is the trail which the courts must follow in all its turns and windings, through swamps and over hills, provided only that it- has been sufficiently blazed and does not trespass on forbidden territory.' Zollmann, Am. Law of Charities, p. 93, § 140. As has been seen, the general purpose and intent of testatrix is clearly apparent, hence her directions 'must be adhered to as rigidly by the courts' as by trustees. Id. p. 92, § 139." (Italics supplied.)
The conclusion that a purely charitable trust was intended and created is fortified by the fact that charitable trusts are highly favored in this jurisdiction since the enactment of § 501.12, as well as by the courts generally, and that all instruments where they are concerned are to be construed liberally in their behalf. Board of Directors of City Trusts v. Maloney, 78 App. D. C. 371, 141 F. (2d) 275; 2 Bogert, Trusts and Trustees, § 369; 2 Perry, Trusts and Trustees (7 ed.) § 697.
After thus determining that testatrix created a trust for exclusively charitable purposes within the area designated by the general purposes of the Foundation, we find no difficulty in coming to the further conclusion that her bequest and devise to the Foundation are clearly exempt from taxation within the meaning of § 291.05. As modified and restricted by the exclusively charitable purpose of the trust, there can be no legitimate objection to the words "medical," "surgical," and "social," as designated among the purposes of the Foundation. Medical and sur: gical activities do indeed occupy an important and beneficent pur pose in the field of pure charity. The word "social" is frequently-used in connection with charitable activities. Charitable organizations, whether supported by the government and its subdivisions or by private endowment and contributions, do much charitable work that is frequently described as "social service." What is a charitable purpose cannot be explicitly defined for all time and for all circumstances.
" It is not desirable to attempt to bind the courts by a. fixed definition in statute or decision. The courts should be left free to apply the standards of the time. What is charitable in one generation may be noncharitable in a later age, and vice versa. Ideas regarding social benefit and public good change from century to century, and vary in different communities." (Italics: supplied.) 2 Bogert, Trusts and Trustees, § 868, p. 1129.
It is immaterial whether the designated trustee of a charitable trust is a charitable corporation or a private corporation when the trust res is clearly earmarTced for a purely cha/ritable use. Matter of Frasch, 245 N. Y. 171, 156 N. E. 656. If the corporation becomes incapable of administering the trust, the court can easily supply a successor. It is elementary that a court of equity will not permit a trust to fail for want of a trustee. Estate of Rowell, 218 Wis. 520, 22 N. W. (2d) 604; 2 Bogert, Trusts and Trustees, § 328. Furthermore, if an attempt ever is made to deviate from a purely charitable purpose, the .public interest will be protected, in that the attorney general has not only the right but the duty to enforce charitable trusts by proper court proceedings. § 501.12, subd. 3; Schaeffer v. Newberry, 227 Minn. 259, 35 N. W. (2d) 287; Longcor v. City of Red Wing, 206 Minn. 627, 289 N. W. 570; see, Restatement, Trusts, § 391; 2 Bogert, Trusts and Trustees, § 111, p. 1255; 12 Minn. L. Rev. 653.
The order appealed from is reversed and the case is remanded to the trial court with directions to enter judgment in accordance with this opinion.
So ordered.
This case comes to the writer by reassignment.
The will left a life estate in the residence to her sister, but the sister predeceased Miss Quinlan. The will also provided for the residence to be occupied as a retreat for Catholic young women for as long as the Senecal Sisters of Chicago should desire to operate the residence as such a retreat. However, the will also provided: "The Board of Trustees of said Foundation shall, however, in spite of any provision of this paragraph, have absolute power, after the death of my said sister, to use or dispose of said premises at any time as in their judgment and discretion they shall so decide, for any purpose within the general purposes of said Foundation." (Italics supplied.)
The history of the early repudiation of charitable trusts in Minnesota, as a parallel to a similar history in New York, Michigan, and Wisconsin, may be found by referring to Thurston, Charitable Gifts and the Minnesota Statute of Uses and Trusts, 1 Minn. L. Rev. 201; Zollmann, Charities, § 34 to 69, 73, 365, with particular reference to § 46, 67, 68, 73, 365. As to subsequent remedial legislation, see 14 Minn. L. Rev. 587; 23 Minn. L. Rev. 670.
We have not overlooked certain language to the contrary in the introductory note to Restatement, Trusts, c. 11, p. 1093.
In re Estate of Anderson, 148 Minn. 44, 180 N. W. 1019; In re Estate of Kelly, 177 Minn. 311, 225 N. W. 156, 67 A. L. R. 1268; 6 Dunnell, Dig. & Supp. § 10257; 57 Am. Jur., Wills, § 1094; see, Restatement, Trusts, § 358, comment c.
For an even more liberal application of tax exemption by the federal courts (involving an outright gift coupled with certain precatory words) under 26 USCA, § 812(d), Internal Revenue Code, which contains language almost identical with M. S. A. 291.05, see In re Sage's Estate (3 Cir.) 122 F. (2d) 480, 137 A. L. R. 658 (footnote 2), certiorari denied, 314 U. S. 699, 62 S. Ct. 480, 86 L. ed. 559.
See, also, Estate of Rowell, 248 Wis. 520, 22 N. W. (2d) 604, involving a construction of an outright bequest, coupled with precatory words, as creating a charitable trust.
For Gray's classic definition, see Jackson v. Phillips, 96 Mass. (14 Allen) 539, 556; Zollmann, Charities, § 201.