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In re Proving the Last Will & Testament & Codicils of Griffin

45 A.D. 102 Court N.Y. App. Div. English

Delivered by Landon, J.:

Contents

Majority

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In the Matter of Proving the Last Will and Testament and Codicils of William Griffin, Deceased. Isaac M. Haswell and John D. Rogers, as Executors, etc., of William Griffin, Deceased, and Round Lake Association, Appellants; Mary Clark and Others, Respondents.

Headnote

Tjyffl—a bequest to one corporation as trustee for another, not sustained in.the absence of statutory authority — when one corporation is not an agent or department of another[1]
A testator who died in Match,- 1898, bequeathed certain personal property to the “ Round Lake Association * * * the amount so hereby given to said association to be prudently invested- by it, and the income and profits arising therefrom to he devoted and applied by said association to the support and maintenance of the school at said Round Lake, known as the Round Lake Summer Institute.” The act under which the Round Lake Association was incorporated (Laws of 1868, chap. 617) ¡authorized it to take and hold real and personal -estate by gift, grant and devise, but did not state the specific object or purpose of the incorporation. The constitution adopted by the corporation under the authority of the act provided “The objects of this association shall be the maintenance of Christian Summer Home, and the promotion of education, morality and religion.”
The association organized and conducted summer schools upon its grounds in buildings suitable for the purpose, and subsequently applied for and obtained from the Regents of the University of -the State of New York a charter incorporating its summer school under the name of the Round Lake Summer Institute. The surrogate refused to find -that the Round Lake Association conducted “ educational projects through the agency of the Round Lake Summer Institute.”
Meld, that such refusal should be construed as a finding that the Round Lake . Summer Institute was not, in a legal sense, the agent or a department of the Round Lake Association, but that each was the separate master of its .own'corporate functions;
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That iu this view the Round Lake Association did not have capacity to take and administer the trust for the benefit of the Round Lake Summer Institute.
The capacity of one corporation to act as trustee, of a trust fund for the benefit ' of another corporation depends upon the charters of the corporations and the statutes applicable to them, and, in the absence of enabling power in such statutes, then upon the general statutes, which define estates, their acquisition and tenure.
Semble, that a bequest to an educational, charitable or religious corporation in trust for the promotion of one of its chartered purposes is not a trust in a legal sense, but is a benefaction given in confidence that the beneficiary will observe thb benefactor’s wishes respecting it.
Appeal by Isaac M. Has well and another, as executors, etc., of William Griffin, deceased, and another, from a decree of the Surrogate’s Court of Albany county, entered in said Surrogate’s Court on the 6th day of March, 1899, construing, under section 2624 of the Code of Civil Procedure, the 8th paragraph of the will of William Griffin, deceased.
The testator died March 26, 1898. ’ By. his .will he directed his -executors to convert his real estate into personal for the purposes of distribution, and, after sundry bequests, provided:
“Eighth. Upon the death of my said wife, I give and bequeath, grant and devise- to the Round Lake Association, heretofore known as the Round Lake Camp Meeting Association of the Methodist Episcopal Church of the Troy Conference, all the rest, residue and remainder of my estate, real and personal, subject, however, to the ■estate for life of my sister-in-law Caroline Garnsey, in my said summer house, grounds, furniture and appointments, and in my said -dwelling house at West Troy, the amount so hereby given to said association to be prudently invested by it, and the income and profits •arising therefrom to ■ be devoted and applied by said association to the support and maintenance of the school at said Round Lake, known as the Round Lake Summer Institute.”
The Round Lake Association was incorporated by chapter 617 of the Laws of 1868, which provides that it may take and hold real and personal estate by gift, grant and devise. No- specific object or purpose of the incorporation is stated in the act, but it was author-’ ized to adopt a constitution not inconsistent with the Constitution and laws of the State. It adopted a constitution, the 2d article <of which provides that “ The objects of this association shall be the
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maintenance of Christian Summer Home, and the promotion of" education, morality and religion.” The president of. the association, is by,--the 2d section of the 5th article of the constitution authorized to “ award the diplomas of all the graduates from the academy,.' the assembly and the summer schools.”
The association owns 200 acres of land on the shore of Round'. Lake, Saratoga county, laid out in an attractive manner, upon which are about 300 cottages and other erections. The surrogate found that one of the objects -of the corporation is the promotion of "education. Before the incorporation of the Round Lake Summer Institute, the association organized and conducted summer schools upon its grounds, in buildings suitable for the purpose. The trustees of the association, with a view to carrying on the educational work of the association, through the agency of the institute, made an application to the Regents of the University for a charter for educational work, with the result that in 1889 a charter was obtained; for the Round Lake Summer Institute as an-academy, ^conditioned upon its acquiring, within two years, suitable buildings and equipment of the value of $50,000, and that the buildings should b& solely used for public academic instruction. In 1890 the Regents-granted an absolute academic charter. The persons who were trustees of the association- were named trustees- in the provisional charter of the institute, and the trustees of the one-have also been the trustees of the other ever since. Before the incorporation of the institute the association had five-buildings for educational purposes upon its grounds, of a value exceeding $50,000.- Soon after- the provisional charter - was granted to the institute, the association leased these buildings and the land occupied by them to the institute for ninety-nine years in consideration of one dollar. The educational work which had previously been conducted by the association has-. since been continued in these buildings, the association receiving-the income and defraying the expense thereof, without- regard to-the question of the sufficiency of 'the income accruing from the institute to meet its expenses. No separate account has been kept by the institute..
The surrogate refused to find that “ the Round Lake Association did carry on its educational projects through' the agency of the: Round Lake Summer Institute.”
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The surrogate decided that the 8th provision of the will is void and of no effect, assigning as grounds therefor that it violated the statutes of the State against perpetuities and unduly suspended the absolute ownership of the personal property intended to be bequeathed, and the alienation thereof.
James Lansing, for the executors, appellants.
Walter E. Ward, for the Round Lake Association, appellant.
T. F. Conway, Peter A. Delaney, Edward O'Connor, Carrol Whittaker, Frost, Daring & Warner and R. J. Cooper, for the various respondents.

If we were permitted to determine the corporate capacity of the Round Lake Association to take and administer the bequest as trustee, and of the Round Lake Summer Institute to become the oest/wi que trust of the bequest, from the actual relations existing between the two corporations, instead of from the act incorporating the association, and the charter incorporating the institute, and from the statutes authorizing bequests and limiting estates, we might hold that the institute is the educational department of the association,, and that this bequest to the association to invest the fund and to-apply the income to the support of the institute in aid of its chartered purposes is a direct benefit to the association, and we thus could uphold it. (Chamberlin v. Chamberlin, 43 N. Y. 424 ; Wetmore v. Parker, 52 id. 450 ; Sheldon v. Chappell, 47 Hun, 59 ; Matter of Isbell, 1 App. Div. 158 .)

It is true that the object of the trustees of the association in promoting the incorporation of the institute, soliciting its charter, and endowing it, was to create a convenient instrumentality which would either assist it in its educational work or relieve it from it. Never-less on the face of their respective charters they- are separate- corporations, neither charter in any way indicating as among its objects the assistance of the other or relation to it.

The refusal of the surrogate to find that the Round Lake Association carried on its educational projects through the agency of the Round Lake Summer Institute should be construed as a finding that

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one is not in a legal sense .the agent or department of the other, but that each is the separate1 master of its. own corporate functions. The one may be the patron of the other, but neither .is part of the other.- So construed,.the refusal is not erroneous.

As the corpus of the bequest is given-to the association to invest and apply the income to the institute, the former is the trustee- ,of the latter. (Underwood v. Curtis, 127 N. Y. 525 .) As both are corporations, the capacity of the-one tó- act as trustee and. of the ■other to become the beneficiary of the' fund depends upon their charters, which indicate their objects, and the -statutes applicable to such corporations; and in the absence of enabling power in such statutes, then upon the general statutes which define estates, and how they may he acquired and held. To pass beyond, these well-defined limits and attempt to ascertain from their practical operations the power and capacity of the corporations to act as trustees and to-take and hold estates, would make the policy of the State dependent upon a rule as varying as the practical operations of the various corporations. ■" .

If this bequest had beeri directly to the Round Lake Summer Institute in trust, to invest the same and apply the .income to the support- and maintenance of its school, it would have been valid. ¡It is ‘a literary or academic corporation, and such bequests upon such trusts are authorized to such-corporations. (Chap. 318, Laws of 1840; chap. 261, Laws of 1841; Adams v. Perry, 43 N. Y. 487 ; Matter of Wesley, 43 N. Y. St. Repr. 952 ; affd., 136 N. Y. 638 .)

' The provisions Of the Revised Statutes" against perpetuities and the suspension of the power of alienation would not' apply, since the' acts cited make an exception in favor of such corporations when the devise or bequest is direct -and absolute. (Id. See, also, Wetmore v. Parker, 52 N. Y. 450 .)

The bequest to an educational, charitable or religious corporation in trust for- the promotion of some one of its chartered purposes is not a trust in a legal sense. A party cannot be trustee for himself. It is a benefaction given in confidence that the beneficiary will ■observe the. benefactor’s expressed wishes respecting it, and the beneficiary by- accepting it agrees to do so. (Bird v. Merklee, 144 N. Y. 544 .)

But where the devise or bequest to a literary,"charitable or religi

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ous corporation is not direct and absolute to it for its own benefit, but is for the use and benefit of another corporation, then, since a corporation has no powers except such as are expressly conferred upon it, •or result by implication, as the incidents of the conferred powers, the power to act as trustee must be found in its charter or in the laws applicable to such charter or corporation, and the beneficiary must in like manner find its power to take the income from the hand of such trustee. We may concede that if the trust were valid and the trustee incompetent, another trustee could be appointed. (Holmes v. Mead, 52 N. Y. 332 , 339.)

This bequest is unlike the devise which was upheld in Adams v. Perry (supra) in which the testator gave a house and lot to trustees named in the will to convey to the Lowville Academy, with directions to use the same in establishing a female department. As' the trustees had no duties except to convey the property, and as under the statute in such case no conveyance was necessary, the court held that the Lowville Academy was the direct devisee, and that establishing the female department was within the chartered powers of the academy. The acts of 1840 and 1841 permitted the testator to make the devise and the academy to receive it. But the case before us is like the bequest in Adams v. Perry in the same will of' other property to the same trustees to invest and apply to the academy to be devoted by the latter to the care of its grounds and the- support of its female department. The court held the latter provision void, and remarked: “ These acts (of 1840 and 1841) give to the corporations described therein capacity to take property granted or devised to them in trust for the purposes therein specified, but do not authorize the creation of any trusts of which such corporations shall be beneficiaries while others are the trustees, not warranted by the •existing law, or give any validity to any such trust. To render these statutes applicable, the property must be given to the corporation upon some trust thereby authorized,”

The trust to the association for the benefit of the institute does not come within the acts cited, but does come within the Revised Statutes, and is void because it creates an unlawful perpetuity. It is not limited upon lives of human beings, but upon the unlimited lives of the corporations, and may last forever.

In Chamberlin v. Chamberlin ( 43 N. Y. 424 ) a bequest of per

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sonal property to the Centenary Fund Society of the Erie Annual Conference of the Methodist Episcopal Church in trust to apply the income for the benefit of Allegany College for such specific purposes as the Centenary Fund Society should direct, was upheldunder the chartered powers of the two corporations. Both were Pennsylvania corporations, and the court found that under the laws of that-State the.one was authorized by the terms of its charter to take as-trustee and the other to take as beneficiary,- pursuant to the terms of the bequest.. So far as the case is an authority,, it is in support, of the unquestioned rule that the terms of the charter of each must, be compared with the laws of the State of its creation to ascertain whether such a bequest is authorized. Sheldon v. Chappell ( 47 Hun, 59 ) is to the same effect. Bnt it was there held that a corporation could act as trustee for a fund in which it had an interest. The beneficiary was incorporated to aid one of the chartered objects of the trustee. YVliile this did not enlarge the powers of the trustee, it created' a new agency through which it could exercise its powers, and thus enabled the trustee to take the bequest to promote its own objects through an agent' especially empowered by the letter of its creation to .promote them. Moreover the trustee was to apply the-fund, not to invest it and apply the income. And thus the power of alienation was not suspended.

The charter of the association does not authorize it to act as trustee for the institute. It does not authorize the institute to accept bequests except directly to itself. There is no implication that the chartered purpose of the former is to care for the latter, or that the latter is to depend upon the bounty of the former.

The decree of the surrogate must be affirmed, with one bill of costs to the respondents, payable out of the estate.

All concurred.

Decree of the surrogate affirmed, with one bill of costs to the respondents, payable out of the estate.

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