Court Opinion

ID: 6755480
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:26:38.593105+00
Date Added: 2024-06-11T16:01:58.355288
License: Public Domain

O’Neill, O. J.
Under Item VIII of his will, Howard Conover provided for the final disposition of the trust property. He first provided that at the death of his wife, if there be in existence at that time a hospital, the trustee should pay to the company owning and operating the hospital, income and money from the principal for the purpose of enlarging the building or increasing the equipment of the hospital, or for the purpose of purchasing or acquiring additional land or buildings therefor.
It is undisputed that there was no such hospital in existence at the time of the death of his wife, Marie. The language of the above portion of his will is, therefore, not controlling in the issue presented to this court, as his will provided for the disposition of the trust property in the event that no such hospital existed at the time of his wife’s death.
He provided further in Item VIII, that if at the time of the death of his wife there was no such hospital, the trustee should hold the trust fund until such a hospital corporation shall be organized, and that the trustee shall pay over to such hospital corporation the sum of $75,000, either in one cash payment or in installments as he may deem best for the purpose of erecting and equipping such a hospital and the buildings therefor. He then proceeded to provide that thereafter the trustee shall pay 90 percent of the net income on the trust fund “for the use and benefit of such hospital. ’ ’ He also provided that at the expiration of 15 years after the death of his wife, or at the end of five years after the organization of such hospital corporation, whichever shall be the later date, the trustee shall pay to such hospital corporation all of the principal of said trust fund for the purpose of operating and improving the hospital.
The specific issue to be decided by this court is whether a bequest, the sole expressed purpose of which is charitable in nature, to a charitable corporation to be organized after the death of the testator, is valid under the common-law rule against perpetuities, as codified in 1932, as G-. C. 10512-8 (now R. C. 2131.08), even though such corporation *215may not be organized within the period of time required by the rule against perpetuities.
The law on this question is settled. Under the rules expressed by the authors who have written in this field, and the decided cases, the law appears to be clear and, after research, no dissenting or minority view has been discovered.
The applicable rule of law appears in 2 Restatement of the Law, Trusts 2d, 314, Section 401;j:
“If property is given in trust to be applied to a charitable purpose upon the happening of an event which may not occur within the period of the rule against perpetuities, and there is no intermediate gift, the trust fails if, but only if, the happening of the event is a condition precedent.
“If the settlor manifests an intention that the charitable trust shall not arise until the happening of the event, and the event may not happen within the period of the rule against perpetuities, the trust fails. Thus, if a testator bequeaths property in trust to apply it to the erection of a memorial window in a cathedral at a certain place if such cathedral should ever be built, and if the settlor did not manifest a general charitable intention (see Section 399), the trust fails.
“On the other hand, if the settlor manifests an intention that the charitable trust shall arise immediately, the trust is valid, even though he directs that the property shall not be used for the charitable purpose until the happening of an event which may not occur within the period of the rule against perpetuities. In such a case the happening of the event is not a condition precedent, but there is an immediate gift to charity with performance delayed. The court may permit the property to be held by the trustees to await the happening of the event, but if in the opinion of the court the event is not likely to happen until the lapse of an unreasonably long time, the court may direct the immediate application of the property to a purpose falling loithin the general charitable intention of the settlor, thus applying the doctrine, of cy pres, See Section 399,
*216“Thus, if a testator bequeaths money * * * in trust for a charitable corporation to be organised after his death for the purpose of accomplishing certain charitable purposes, the gift is valid although it is possible that the corporation might not be organised within the period of the rule against perpetuities. In such a case there is an immediate gift for charitable purposes, and the court will direct that the property be conveyed to the corporation if it is organised within a reasonable time, or will frame a scheme for the application of the property to the designated charitable purposes and direct that it be administered by trustees appointed by the court, under the doctrine of cy pres. See Section 399. In such a case the organisation of the corporation is not a condition precedent to the existence of the trust, nor is it ordinarily such an essential part of the testator’s intention as to preclude the application of the cy pres doctrine.” (Emphasis added.)
This statement of the rule in 2 Restatement of the Law, Trusts 2d, fits the instant case like the proverbial glove fits the hand. It is exactly in point. It is correct that the testator, in the instant case, sets out certain restrictions or conditions which he desired be placed upon the instrumentality through which the income and the principal of the trust was to be applied to the charitable purposes of the bequest. He carefully separated the statement of the desired restrictions or conditions upon the instrumentality from the statement of the purposes of the bequest. The trust authorities, as well as the cases, not only assert that a charitable corporation, which may not be organized within a period of time required by the rule against perpetuities, is not a condition precedent which will invalidate the trust under the rule, but they also assert that conditions put on the mode of application of the trust are not conditions precedent which will invalidate the trust under the rule against perpetuities.
4 Scott, The Law of Trusts (3 Ed.), 3163, Section 401.8, makes this point:
“ * * * Even if the corporation may not be organized within that period, the bequest is nevertheless valid if the *217testator had a general intention to devote the property to the specified charitable purposes. In such a case there is an immediate gift to charity subject to no condition precedent; and although the particular mode of application is subject to such a condition, that does not invalidate the gift.” (Emphasis added.) See cases cited by Scott.
Here, the language of the trust instrument is unmistakably clear as to the general intent of the testator to devote the property to the specified charitable purposes. The purposes of the charity were separately set forth and described in the following language:
“ * * * then such trustee shall pay over to such hospital corporation the sum of seventy five thousand dollars either in one cash payment or in installments as he may deem best for the purpose of erecting and equipping such a hospital and the buildings therefor and shall thereafter pay to such hospital corporation ninety percent of the net income on the trust fund so remaining until 15 years shall have elapsed from the death of my wife or until five years after the organization of such hospital corporation which ever shall be the longer period, such payments to be for the use and benefit of such hospital * * (Emphasis added.)
Finally the instrument provides for the payment of all the remaining principal of such trust “for the purpose of operating and improving such hospital.”
Considering the language of the bequest in its entirety, it is plain that the general intent of the testator was to provide facilities, through the instrumentality of a charitable corporation, which would make medical care and health services in a hospital available and accessible to the people of the village of Franklin, Ohio, and the surrounding area.
Ould v. Washington Hospital for Foundlings (1877), 95 U. S. 303, is a case strikingly similar to the instant ease in its pertinent facts and in the controlling legal issue which it presented to the court. In that case, the testator made a bequest of his property in trust to trustees in the following language (page 305):
*218<i# * * m trust to hold the said fourteen lots of ground * as and for a site for the erection of a hospital for foundlings, to be built and erected by any association, society, or institution that may hereafter be incorporated by an act of Congress as and for such hospital, and upon such incorporation upon further trust to grant and convey the said lots of ground and trust-estate to the corporation or institution so incorporated for the said purpose of the erection of a hospital, which conveyance shall be absolute and in fee: Provided, nevertheless, that such corporation shall be approved by my said trustees * * *; and, if not so approved, then upon further trust to hold the said lots and trust-estate for the same purpose, until a corporation shall be so created by act of Congress, which shall meet the approval of the said trustees, or the survivor or successors of them, to whom full discretion is given in this behalf; and, upon such approval, in trust to convey as aforesaid; and I recommend to my said trustees to select an institution which shall not be under the control of any one religious sect or persuasion * * V’
The United States Supreme Court held that there was no violation of the rule against perpetuities and that the trust was, therefore, valid. The court reasoned that there was an immediate gift to charity and thus a vesting which eliminates any problem of remoteness. Therefore, the rule against perpetuities does not apply. The court said, at page 316:
“* * * The gift was Immediate and absolute, and it is clear beyond doubt that the testator meant that no part of the property so given should ever go to his heirs-at-law, or be applied to any other object than that to which he had devoted it by the devise here in question. ’ ’
In the instant case, as in Quid, the bequest was made to a hospital corporation to he organized.
In the instant case, as in Quid, the purpose for which the trust property was to be used was specified.
In the instant case, as in Ould, there was no intent manifested that the property was to ever go to the testator’s heirs-at-law.
*219In the instant case, there was a provision that the hospital be located in Franklin, Ohio, or within one mile thereof ; in Ould, the requirement was that the hospital be located upon 14 lots which were a part of the trust estate under the terms of the trust.
In Ould, there was a recommendation to the trustees to select an institution which “shall not be under the control of any one religious sect or persuasion.”
In the instant case, there was a restriction placed upon the hospital corporation to be organized that it not, in the opinion of the trustee, be controlled by any religious organization and that, in the opinion of the trustee, it be properly organized, managed and controlled. However, it was provided further that the judgment of the trustee, as to whether it was controlled by any church or religious denomination and as to whether it was properly organized, managed and controlled, was to be absolutely conclusive and final.
In Ould, there was a restriction that the bequest was to be made to an association, society or institution to be incorporated by an act of Congress and approved by the trustees, with the further provision that if not so approved, then the trustees were to hold the property for the same purpose until a corporation shall be so created by an act of Congress which would meet the approval of the trustees.
The condition with regard to location of the hospital was more narrow and restricted in Ould than in the instant case.
The condition with regard to the hospital’s proper organization, management and control, and the condition with regard to the hospital’s control, directly or indirectly, by any church or religious denomination, are both conditions placed within the sole, absolute and final discretion of the trustee, as in Ould, where the organization of a hospital corporation meeting the conditions of the testator is placed within the sole, absolute and final discretion of the trustee. In the event such corporation does not meet the approval of the trustee, he is directed to hold the money *220in trust until a corporation which meets his approval is formed.
The court held that none of these conditions were conditions precedent. The rule of law asserted by the Supreme Court was that there was an immediate gift to charity and that the restrictions and requirements were not conditions precedent, the mode of execution only being made dependent upon future events.
Bogert states the rule with equal clarity and discusses more fully the reason for the rule. 3 Bogert, The Law of Trusts and Trustees (2 Ed.) 747, Section 344:
“Quite often a settlor desires his charity to be administered through the medium of a corporation, and directs that one be organized, and that, when it is in existence, his executor or a trustee shall convey certain property to the corporation for the purpose of being held in trust by the corporation or being held by the corporation as its absolute property. Here, if it is held that the gift for charity is not to take effect until the corporation is organized, and there is no provision that incorporation shall occur within existing lives and twenty-one years, the difficulty with the rule against remoteness discussed in the next preceding section is encountered. The gift to charity is not sure to vest within existing lives and twenty-one years.
“In meeting this situation, the courts have exemplified their sympathy with charities and desire to support them wherever possible. They have usually held that the instrument manifested an intent on the part of the settlor that there should be an immediate gift to charity and that the organization of the corporation should result merely in a change in the method of administration. If there has been the slightest basis for so doing, the courts have decreed that the settlor intended a single trust for charity, to start at the time his deed or will became effective, to be administered by his executor or trustee until the incorporation occurred, and then to be foirned over to the neioly formed corporation for execution. Such construction of the settlor’s desires avoids all remote vesting problems. The fund is vested in trustees for charity at once. The *221equitable interest immediately passes to the portion of the community to be benefited and remains there indefinitely. The incorporation has no more significance than would the substitution of a new trustee. If the incorporation never occurs, chancery can exercise its well-recognized power to alter terms as to charitable trust administration and continue the original method of execution or substitute another. The extremely liberal and sympathetic construction given to these gifts obviates the necessity of making any exception to the rule against remoteness.” (Emphasis added.)
This rule, which appears to be universally accepted, is based upon the courts’ historic sympathy to charities and the courts’ consistent desire to support them wherever possible.
The rationale used by the courts when the gift is to a charity corporation, which may not be organized within the time specified by the rule against perpetuities, is that the gift to charity is held to be immediate and that the property is held in trust by the trustee until the corporation may be organized or the court acts under the doctrine of cy pres. Thus, the courts hold that the property is vested and, therefore, there is no problem of remoteness.
Cases cited by Scott and Bogert involve fact situations where the corporation was organized before the action was initiated and the attack was made that under the provisions of the trust the corporation was not required to be organized within the period of time required by the rule and might not have been organized until after that time expired. Ould v. Washington Hospital for Foundlings, supra. Other cases involve fact situations where the corporation was not organized at the time the action was initiated and under the provisions of the instrument, as in the instant case, the corporation might not have been organized until after the time required by the rule had expired, or not at all. See Franklin v. Hastings (1912), 253 Ill. 46, 97 N. E. 265.
There is another persuasive reason why this court should not deviate from the settled rule of trust law which validates a bequest to a charitable corporation which has *222not been organized at the time the trust comes into being, and which may not be organized within the time required by the rule against perpetuities. In 1967, the Ohio General Assembly enacted R. C. 2131.08(C), which requires, with regard to interests in real or personal property created by wills of decedents dying after December 31, 1967, reformation of any such interest which violates the rule against perpetuities. Although R. C. 2131.08(C) does not specifically mention charitable trusts, it impliedly codifies the settled judicial doctrine that a trust for the benefit of a charitable corporation not in existence when the trust arose and not certain to be formed within the period allowed by the rule is nevertheless valid. Hence, the statute mandates reformation of trusts similar to the Conover trusts but created after 1967.
As to testamentary trusts which came into being prior to 1968, it would be an unwise position for this court to reject the settled rule upholding trusts to charitable corporations to be organized after the trust arose. In a field as significant and sensitive as the field of trust law, this court should not take a position contrary to a widely accepted rule which has now been codified by our General Assembly. To do so would unsettle a portion of the law of trusts which lawyers can be expected to have relied upon in drafting instruments and interpreting the law for their clients.
As to the power of a court, in the absence of a statute, to reform an interest which violates the rule against perpetuities, see In re Estate of Chun Quan Yee Hop (1970), 52 Hawaii 40, 469 P. 2d 183.
The testator anticipated that some years might elapse before the hospital corporation would be organized. This is evident by the provision that “such trustee shall * * * pay to such hospital corporation 90 percent of the net income on the trust fund so remaining until 15 years shall have elapsed from the death of my wife or until five years after the organisation of such hospital corporation whichever shall he the longer period * * V’ (Emphasis added.)
The trustee, in accordance with the intent of the testa*223tor, held the trust funds and waited for such a hospital corporation to be organized.
After the appellants filed their action seeking to have the trust invalidated and the trust funds distributed to the heirs, the trustee filed his petition seeking instructions from the Probate Court as to the proper distribution of the trust funds. His petition was filed well within the time allowed by the rule against perpetuities.
It should be pointed out, however, that any delay on the part of the trustee in seeking instructions from the court with regard to the distribution to be made of the trust funds is not a legal ground upon which the court may invalidate the trust under the rule against perpetuities to defeat the intention of the testator and deny the beneficiaries the benefits of the trust. There are no cases or treatises which make delay on the part of the trustee grounds for invalidating the trust.
Appellants argue in their brief that the wills creating the trusts do not establish that the Conovers had a general charitable intent, and that, therefore, the doctrine of ey pres is inapplicable to them. Appellants state: “The purpose of the Conovers was narrow and specific: to have a hospital built in Franklin, Ohio or within one mile thereof that met all the conditions set out in the Conover wills.” That statement is, of course, purely speculative, and it is not accepted by this court. Nothing in either Howard or Marie Conover’s will specified that failure to fulfill their expressed intent—providing a hospital in or around Franklin—was to be followed by distribution of the trust property to their respective heirs. As stated in 4 Scott, The Law of Trusts, supra, 3094, Section 399.2:
“* * * It is ordinarily impossible to determine what disposition the testator intended should be made of the property if his particular purpose could not be carried out. Indeed, it is ordinarily true that the testator does not contemplate the possible failure of his particular purpose, and all that the court can do is to make a guess not as to what he intended but as to the what he would have intended if he had thought about the matter.”
*224When “guessing” about the intent of a charitable testator, this court’s attitude is epitomized by McIntire’s Adm’rs. v. Zanesville (1867), 17 Ohio St. 352. In the early 1800’s, John Mclntire executed a will placing the greater part of his estate into a trust “for the use and support of a poor-school, which they [the trustees] are to establish in the town of Zanesville, for the use of the poor children in said town * * McIntire died in 1815. The trustees subsequently erected a building and maintained a “poor-school” therein. In 1856, however, the building was placed under the control of the local board of education, which discontinued its exclusive use as a school for poor children. The reasons prompting this transfer were “the flourishing condition of the public free schools of the city, and the repugnance of parents and children toward a distinctive ‘poor-school’ * # 17 Ohio St., at 353.
Transfer of the school to the board of education called into question the trustees ’ future duties, and hence they sought instructions from the judiciary as to the proper manner of executing the trust. In a ringing affirmation of the continued viability of the trust, this court, at page 363, “found” a general charitable intent in Mclntire’s will:
“But the purpose of the donor being to establish a ‘school’ or ‘institution’ for the use of poor children, and the state having supplied free schools for all children, what shall be done with the fund? Is the object of the charity exhausted, and must the fund be paid over to the heirs of the donor? We think not. We must look deeper than the mere words of this donation, and, through them, see its spirit. We must inquire what the donor himself would now direct, had he lived to witness the present altered circumstances of the case. His object was to educate poor children to the extent of the fund bequeathed, and the ‘school’ or ‘institution’ provided for in the will, were mere means to that end. Had circumstances remained unchanged, perhaps a free ‘school’ for poor children would have been the only necessary and appropriate instrumentality for that purpose, and the whole fund might have been exhausted, by thus merely remitting tuition fees to the *225scholars who should attend. But this means having become impracticable, can no other be adopted to the same end? The law having anticipated and supplied the charity, so far as free schools are required, should not the trustees reach their hands further, and do more, and for that purpose resort to other means to effect, as far as the fund will go, the ultimate object of the donor? That object was, to instruct poor children in spite of their poverty. It was, so far to relieve their poverty as to make education accessible to them—to lift from them, as it were, that poverty which shuts out the light of knowledge, or so far to break through it, as to let in that light. This can be done by other methods than by merely remitting their tuition fees, which form but an inconsiderable part of the expenses of an education.”
Similarly, this court today holds that the wills of Howard and Marie Conover evidence a general charitable intent on their part to provide medical and health services to the residents of Franklin and those people living in the surrounding area. Erection and maintenance of a hospital within the geographical limits specified by the wills was the contemplated means to that objective. It will not, however, be considered the exclusive means. The express provisions of Item VIII of Howard Conover’s will and Item V of Marie Conover’s will established an intent on the part of the Conovers to provide the citizens of Franklin and of its immediate environs with a general medical and health facility. These express provisions allow this court to imply that had the Conovers foreseen the course of events which led to this litigation, they would have directed that the trust property be utilized to provide medical and health services through a medium other than a hospital located in or near the small municipality of Franklin.
Since a general charitable intent can be implied from the express provisions of the Conover wills, and since the charitable trusts were not conditioned upon failure of a prior noneharitable disposition of the trust property, the rule against perpetuities was not violated by the Conover trusts. However, this court agrees with the Court of Appeals that “this case cries out for the application of the *226doctrine of cy pres. ’ ’ The Conover trusts were created almost 30 years ago, and there is still no hospital or hospital corporation satisfying the terms of the trusts. It is time to distribute the trust property in a manner which comports with the general charitable intent of the Conovers.
A trial court is the proper forum in which evidence can be adduced and a decision reached on the question of distribution. For that reason, the Court of Appeals was correct in remanding these consolidated cases to the Probate Court of Warren County for further proceedings. The Probate Court should take whatever steps are necessary to notify the community, on a county-wide basis, of the purpose of the further proceedings. Interested persons should be allowed to submit and argue for the adoption of specific distribution schemes.
In framing its final order of distribution, the Probate Court’s duty is to effectuate the general intent of the Con-overs to provide medical and health services to the residents of Franklin and its immediate environs. In performing this duty, the court must attempt to respect the desires of the Conovers that such services be provided through nonprofit, nonreligious organizations which are available and accessible to the residents of Franklin and the surrounding area.
For the foregoing reasons, the judgment of the Court of Appeals is affirmed, and the cause is remanded to the Probate Court of Warren County for further proceedings.

Judgment affirmed.

Herbert, Corrigan, Stern, Celebrezze and W. Brown, JJ., concur.