Court Opinion

ID: 4292745
Source: CourtListenerOpinion
Date Created: 2018-07-10 14:52:36.21248+00
Date Added: 2024-06-11T14:38:11.891943
License: Public Domain

[Cite as First Merit Bank v. Akron Gen. Med. Ctr., 2018-Ohio-2689.]

                                       COURT OF APPEALS
                                      STARK COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT

FIRSTMERIT BANK, N.A.                                      JUDGES:
                                                           Hon. John W. Wise, P. J.
        Plaintiff-Appellee                                 Hon. W. Scott Gwin, J.
                                                           Hon. Craig R. Baldwin, J.
-vs-
                                                           Case No. 2017 CA 00134
AKRON GENERAL MEDICAL
CENTER, et al.
                                                           OPINION
        Defendants-Appellants

CHARACTER OF PROCEEDING:                              Civil Appeal from the Court of Common
                                                      Pleas, Probate Division, Case No. 225942

JUDGMENT:                                             Affirmed

DATE OF JUDGMENT ENTRY:                               July 9, 2018

APPEARANCES:

For Plaintiff-Appellee                                For Defendant-Appellant DHSC

REX W. MILLER                                         ROCCO D. POTENZA
LESH, CASNER & MILLER                                 HANNA, CAMPBELL & POWELL
Suite 606 Belden Place                                3737 Embassy Parkway, Suite 100
4150 Belden Village Street, NW                        Akron, Ohio 44333
Canton, Ohio 44718-3651
                                                      For Massillon Rotary
For Defendant AG
                                                      JUSTIN S. GREENFELDER
TODD K. DeBOE                                         BUCKINGHAM DOOLITTLE & Burroughs LLC
PRINCIPAL ASSISTANT ATTORNEY GENERAL                  4518 Fulton Drive, NW, Suite 200
Charitable Law Division                               PO Box 35548
30 East Broad Street, 14th Floor                      Canton, Ohio 44735
Columbus, Ohio 43215
                                                      For Health Foundation

                                                      MARK R. PERCIVAL
                                                      BROWN & PERCIVAL CO., LPA
                                                      121 Lincoln Way East
                                                      Massillon, Ohio 44646
Stark County, Case No. 2017 CA 00134                                                      2

Wise, P. J.

       {¶1}   Appellant DHSC, LLC dba Affinity Medical Center appeals the June 20,

2017, decision of the Stark County Probate Court’s decision declaring it was not entitled

to proceeds from the Kathryn L. Seymour Amended Trust.

       {¶2}   Appellees in this matter are First Merit Bank, N.A., Massillon Rotary

Foundation Trust, The Health Foundation of Greater Massillon, Akron General Medical

Center and the Attorney General Mike Dewine.

                                 STATEMENT OF THE FACTS

       {¶3}   On April 18, 2016, Plaintiff-Appellee FirstMerit Bank, N.A. (FirstMerit), as

Trustee of the Kathryn L. Seymour Revocable Trust, filed a complaint for declaratory

judgment with the Stark County Court of Common Pleas, Probate Division. First Merit

stated that Kathryn L. Seymour had established a Trust and among the beneficiaries of

the Trust, she named Massillon Community Hospital.

       {¶4}   In its Complaint, FirstMerit alleged that while Massillon Community Hospital

was a not-for-profit hospital at the time Ms. Seymour established the trust, it subsequently

was sold to a for-profit entity and became known as Affinity Medical Center. FirstMerit

further alleged that the Seymour Trust was a "charitable trust" and that because her

charitable intent could not be carried out, the court should apply the cy pres doctrine and

designate the proceeds of the Trust be distributed to another charitable organization.

       {¶5}   FirstMerit named as Defendants Akron General Medical Center, Appellant,

DHSC, LLC dba Affinity Medical Center (hereinafter referred to as "Affinity"), St. John

United Church of Christ, Salvation Army and the Ohio Attorney General. Thereafter, the

Greater Health Foundation of Massillon and the Greater Massillon Rotary Foundation
Stark County, Case No. 2017 CA 00134                                                       3

intervened as Defendants, claiming interest in the proceeds of the Trust. All parties

entered answers to the Trustee's complaint. Thereafter, pursuant to Order of the Court,

the parties submitted briefs in support of their respective positions.

       {¶6}   On June 20, 2017, the Stark County Probate Court issued an Order

declaring that Appellant Affinity was not entitled to the proceeds of the Trust. Instead, the

court held that the cy pres doctrine applied and awarded the proceeds of the Trust be

distributed to Defendants Health Foundation of Greater Massillon and Massillon Rotary

Foundation Trust.

       {¶7}   It is from this decision Appellant Affinity now appeals, raising the following

errors for review:

                                  ASSIGNMENTS OF ERROR

       {¶8}   “I. THE TRIAL COURT ERRED IN CONCLUDING THAT APPELLANT-

AFFINITY, WAS NOT ENTITLED TO THE PROCEEDS OF THE AMENDED TRUST,

WHERE THE CLEAR AND UNAMBIGUOUS TERMS OF KATHRYN SEYMOUR'S

AMENDED TRUST EXPRESSED HER INTENT THAT THE PROCEEDS BE

DISTRIBUTED TO MCH, ITS SUCCESSORS OR ASSIGNS, FOR THE SPECIFIC

PURPOSE OF IMPROVING THE HOSPITAL FACILITIES.

       {¶9}   “II. THE TRIAL COURT ERRED IN CONSIDERING EXTRINSIC

EVIDENCE, WHEN IT INDICATED IT WOULD NOT DO SO. MOREOVER, IF RESORT

TO EXTRINSIC EVIDENCE IS APPROPRIATE DUE TO ANY PERCEIVED AMBIGUITY,

THE EXTRINSIC EVIDENCE DEMONSTRATES THAT MS. SEYMOUR KNEW, AT THE

TIME SHE EXECUTED HER AMENDED TRUST, THAT MCH WOULD BECOME A FOR-

PROFIT HOSPITAL.
Stark County, Case No. 2017 CA 00134                                                      4

       {¶10} “III. THE TRIAL COURT ERRED IN APPLYING THE CY PRES DOCTRINE

WHERE THE GRANTOR CLEARLY RESTRICTED THE BEQUEST TO A SPECIFIC

LIMITED PURPOSE. THE CY PRES DOCTRINE ONLY APPLIES WHERE THE TRUST

LANGUAGE EXHIBITS A GENERAL CHARITABLE INTENT.”

                                             I., II., III.

       {¶11} We have chosen to address these assignments collectively because of the

interrelationship of the facts and laws pertinent to each assignment of error.

       {¶12} In each of its assignments of error, Appellant claims the trial court erred in

finding that Appellant Affinity was not entitled to the proceeds from the Trust and applying

the cy pres doctrine. We disagree.

       {¶13} This case involves the Kathryn Seymour Amended Trust Agreement, which

provided, inter alia, that upon Ms. Seymour’s death, her personal and real property would

be distributed to her daughter. The balance of the trust estate was to be distributed as

follows:

              2. All of the rest, residue and remainder of the trust estate shall be

       converted to cash and distributed as follows:

              a. Fifty percent (50%) thereof to St. John's United Church of Christ

       presently located at 121 Tremont Ave. S.E., Massillon, Ohio, its successors

       or assigns. This bequest is unrestricted and the Board of Trustees or other

       governing body may use and expend the same for the benefit of St. John's

       United Church of Christ, its successors or assigns, in any manner it deems

       appropriate.
Stark County, Case No. 2017 CA 00134                                                         5

              b. Forty percent (40%) thereof to the Massillon Community Hospital,

       its successors or assigns. These funds shall be restricted so as to benefit

       only the facilities of said hospital at 875 Eighth Street, N.E., Massillon, Ohio.

       These improvements need not be limited to building renovation. Any

       expenditure of funds which benefit the operation of the above location shall

       be permitted.

              c. Ten percent (10%) thereof to the general fund of the Massillon,

       Ohio Branch of the Salvation Army.

                                         Cy Pres Doctrine

       {¶14} The cy pres doctrine is a rule of construction by which charitable gifts are

preserved for the public benefit. In the law of trusts it refers to a rule of construction used

by courts of equity to effectuate the intention of a charitable donor “as near as may be”

when it has become impossible or impractical by reason of changing conditions or

circumstances to give literal effect to the donor's intention. Cheney v. State Council of

Ohio Junior Order United Am. Mechanics (1959), 11 O.O.2d 112, 162 N.E.2d 242, 244.

       {¶15} The cy pres doctrine is a saving device that permits a court to direct the

application of the property held in a charitable trust to a charitable purpose different from

that designated in the trust instrument. Daloia v. Franciscan Health Sys. of Cent. Ohio,

Inc. (1997), 79 Ohio St.3d 98, 106, 679 N.E.2d 1084.

              “ ‘Roughly speaking, it is the doctrine that equity will, when the charity

       is originally or later becomes impossible, inexpedient, or impracticable of

       fulfillment, substitute another charitable object which is believed to

       approach the original purpose as closely as possible. It is the theory that
Stark County, Case No. 2017 CA 00134                                                      6

      equity has the power to revise a charitable trust where the settlor had a

      general charitable intent in order to meet unexpected emergencies or

      changes in conditions which threaten its existence.’” (Emphasis added.) Id.,

      quoting Bogert, Trusts & Trustees (2 Ed.Rev.1991) 95-96, Section 431.

      {¶16} At common law, Ohio courts have followed the traditional view that before

the cy pres doctrine will be applied by a court, the following three essentials must be

present:

             (1) there must be a valid charitable trust and one that is invalid will

      not be cured by an application of the doctrine;

             (2) it must be established that it is impossible or impractical to carry

      out the specific purposes of the trust;

             (3) it must be established that the donor evinced a general charitable

      intent. Cheney at 244.

      {¶17} The common-law doctrine of cy pres has recently been codified at

R.C. §5804.13, which provides:

             (A) Except as otherwise provided in division (B) of this section, if a

      particular charitable purpose becomes unlawful, impracticable, or

      impossible to achieve, all of the following apply:

             (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.

             (3) The court may apply cy pres to modify or terminate the trust by

      directing that the trust property be applied or distributed, in whole or in part,
Stark County, Case No. 2017 CA 00134                                                      7

      in a manner consistent with the settlor's charitable purposes. In accordance

      with section 109.25 of the Revised Code, the attorney general is a

      necessary party to a judicial proceeding brought under this section.

             (B) A provision in the terms of a charitable trust for the distribution of

      the trust property to a noncharitable beneficiary prevails over the power of

      the court under division (A) of this section to apply cy pres to modify or

      terminate the trust.

      {¶18} The official comment to R.C. §5804.13 indicates that this codification

“modifies the doctrine of cy pres by presuming that the settlor had a general charitable

intent when a particular charitable purpose becomes impossible or impracticable to

achieve.”

      {¶19} In the case sub judice, the trial court made the following findings:

             [T]he Grantor demonstrated a charitable intent.

             Due to the changing circumstances surrounding the merger of

      Massillon Community Hospital as a now for-profit hospital operating as

      Affinity Hospital, the Grantor’s charitable intent has become frustrated and

      impossible to achieve.

             A distribution of the funds to a for-profit hospital would contradict

      Grantor’s overt charitable desires. (June 20, 2017, JE at 8)

      {¶20} Based on these findings, the probate court determined that pursuant to

R.C. §5804.13, the court could apply the cy pres doctrine in order to save the charitable

distribution and maintain Grantor’s overarching charitable intent.
Stark County, Case No. 2017 CA 00134                                                        8

       {¶21} Upon review, we find no error in the trial court’s analysis or decision in this

matter. Initially, we find that the trial court’s determination that the gift to Massillon

Community Hospital was impossible to carry out because such entity no longer existed.

The trial court then found, as do we, that DHSC dba Affinity was not an appropriate

recipient of the gift because it is a for-profit entity.

       {¶22} The trial court then looked at the dispositive language contained in the Trust

and found it to be clear and unambiguous. The court found that the Settlor had intended

for her residuary estate to be distributed to only charitable organizations, i.e., a church, a

non-profit hospital and the Salvation Army. The court found that such evidenced a

charitable intent.

       {¶23} We likewise find that Ms. Seymour’s intent was charitable, as evidenced by

choosing only charitable organizations and in leaving approximately half of the residue

and remainder of her Trust to a hospital, a health-based organization. Where a trust

benefits the general promotion of health, the settlor’s intent is presumed to be charitable.

Bank One Tr. Co., NA v. Miami Valley Hosp., 2nd Dist. Montgomery No. 19703, 2003-

Ohio-4590, ¶ 26. A trust established to generally benefit the promotion of health is a per

se demonstration of the testator's charitable intent. See Scott, Law of Trusts, at Section

368, p. 130. The law favors charitable bequests, and they are liberally construed to

accomplish the testator or grantor's purpose. Wills v. Union Savings & Trust Co. (1982),

69 Ohio St.2d 382, 386, 23 O.O.3d 350, 352–353, 433 N.E.2d 152, 156; Becker v. Fisher

(1925), 112 Ohio St. 284, 294–295, 147 N.E. 744, 747; Hess v. Sommers (1982), 4 Ohio

App.3d 281, 285, 4 OBR 500, 504–505, 448 N.E.2d 494, 498–499.
Stark County, Case No. 2017 CA 00134                                                      9

       {¶24} Finally, we find no merit in Appellant’s argument that the trial court erred in

considering extrinsic evidence in reaching its decision. Appellant argues that Massillon

Community Hospital’s status as a not-for-profit organization is not contained in Ms.

Seymour’s Trust agreement and therefore constitutes extrinsic evidence. The non-profit

status of Massillon Community Hospital was agreed to by the parties as set forth in the

Complaint and Answers thereto and was never a contested issue in this matter. DHSC

dba Affinity admitted in its Answer that Massillon Community Hospital was a non-profit

organization at the time Ms. Seymour amended her Trust to include such gift. As such,

we do not find that the trial court considered extrinsic evidence in making its ultimate

decision in this matter.

       {¶25} Accordingly, Appellant’s assignments of error are overruled.

       {¶26} For the reasons stated in the foregoing opinion, the judgment of the Court

of Common Pleas, Probate Division, Stark County, Ohio, is affirmed.

By: Wise, P. J.

Gwin, J., and

Baldwin, J., concur.

JWW/d 0627