Opinion ID: 2570347
Heading Depth: 1
Heading Rank: 5

Heading: Cy Pres versus Equitable Deviation

Text: ¶ 18 The Court of Appeals upheld the trial court's trust modification applying the doctrines of cy pres and equitable deviation. Niemann, 118 Wash.App. at 838-41, 77 P.3d 1208. The similar objective of these doctrines is to best effectuate the settlor's intent and purpose. While noting some differences in the two doctrines, the Court of Appeals failed to recognize the fundamental distinction. Id. at 838-39, 77 P.3d 1208. The Restatement (Second) of Trusts commentary clarifies this distinction by providing that [t]he rule stated in this Section [regarding equitable deviation] has to do with the powers and duties of the trustees of charitable trusts with respect to the administration of the trust; it has to do with the methods of accomplishing the purposes of the trust. RESTATEMENT (SECOND) OF TRUSTS § 381 cmt. a (1959). It goes on to distinguish it from cy pres: The question of the extent to which the court will permit or direct the trustee to apply the trust property to charitable purposes other than the particular charitable purpose designated by the settlor where it is or becomes impossible or illegal or impracticable to carry out the particular purpose involves the doctrine of cy pres.... Id. In sum, courts apply equitable deviation to make changes in the manner in which a charitable trust is carried out while courts apply cy pres in situations where trustees seek to modify or redefine the settlor's specific charitable purpose. Compare Daloia v. Franciscan Health Sys. of Cent. Ohio, Inc., 79 Ohio St.3d 98, 679 N.E.2d 1084, 1091-92 (1997) (due to change in circumstances, permitted deviation from the express terms of the trust instruments ... to carry out the settlors' charitable wishes), with In re Trust Known as Spencer Mem'l Fund, 641 N.W.2d 771, 776 (Iowa 2002) (noting cy pres permits substitution of trust beneficiaries); see also GEORGE GLEASON BOGART & GEORGE TAYLOR BOGART, THE LAW OF TRUSTS AND TRUSTEES § 396 (rev.2d ed.1977, repl.vol.1991); 15 AM. JUR.2D Charities § 155 (2000). ¶ 19 As there is a singular trust issue before the court, only one doctrine, and not the other, is applicable here. The threshold inquiry therefore is whether the term VCC seeks to modify concerns an administrative provision of the trust. VCC, as trustee, does not seek to modify the primary purpose of the trust, [7] apply the funds to an alternative objective, nor substitute beneficiaries. Rather, it hopes to remove the alleged restriction on alienation of the property in order to further the trust's primary purpose. Courts have often classified restrictions on the sale of property as administrative provisions. See, e.g., Colin McK. Grant Home v. Medlock, 292 S.C. 466, 349 S.E.2d 655, 656-59 (Ct.App.1986) (where court discerned primary intent of settlors was to provide housing for disadvantaged elderly Presbyterians, court applied deviation to permit sale of land due to declining neighborhood conditions, even though trust required home be located at specific location as a specific monument to one of the settlors). [8] The Restatement commentary regarding deviation also supports this view. Where sale of land forbidden by terms of trust. If a testator devises land for the purpose of maintaining a school or other charitable institution upon the land, and owing to a change of circumstances it becomes impracticable to maintain the institution on the land, the court may direct or permit the trustee to sell the land and devote the proceeds to the erection and maintenance of the institution on other land, even though the testator in specific words directed that the land should not be sold and that the institution should not be maintained in any other place. RESTATEMENT (SECOND) OF TRUSTS § 381 cmt. e; accord RESTATEMENT (THIRD) OF TRUSTS § 66 cmt. b (2003) (the provision subject to modification or deviation may be one expressly... forbidding the sale of certain properties); see also IIA AUSTIN WAKEMAN SCOTT & WILLIAM FRANKLIN FRATCHER, THE LAW OF TRUSTS § 167, at 287-88 (4th ed.1987) (in discussing equitable deviation, notes that [e]ven though the settlor has expressly forbidden what the court permits to be done, the theory is that he would not have forbidden it, but on the contrary would have authorized it if he had known of or anticipated the circumstances). Based on the above considerations, the application of equitable deviation, and not cy pres, is the appropriate issue for this court's analysis. [9]