Sherman v. Richmond Hose Co. No. 2

Mrs. Kenny died in 1905. By her will she bequeathed $10,000 to the Richmond Hose Company “to be kept at all times intact and the income derived from the safe and judicious investment thereof to be devoted to the reasonable and proper uses of said company for whatever purposes its members acting-as an organization may see fit to direct.” If, however, this legacy for any reason “ shall lapse or fail or for any cause not take effect in whole or in part ” she bequeathed it to Mr. Sherman and Mr. Atwater or to the one who survived her. Mr. Atwater died in 1910.

The Richmond Hose Company was a corporation organized in 1883 under chapter 397 of the Laws of 1873, for the purpose of aiding in the suppression of fires in the village of Batavia. It could only engage under the statute in such business as properly belongs to hose companies. In taking part in the prevention of fires it was placed under the control and subject to the orders of the village fire authorities. Annually its trustees must file an inventory of its property and an affidavit that it has not directly or indirectly engaged in any other business. Before its certificate of incorporation could be filed it had to be approved by the trustees of the village. It might take and hold personal property bequeathed to

This gift created no trust. And the title of the property vesting at once there was no suspension of its ownership or of its alienability. (Matter of Griffin, 167 N. Y. 71 ; Wetmore v. Parker, 52 N. Y. 450 .) The purpose for which the gift was made is reasonably clear. The income is to be applied “ to the proper uses of the company.” These purposes are defined by its certificate of incorporation and by the statute. They are uses incidental to the end of fire protection for the village.

Whether the hose company is a charitable corporation within the meaning of that term wherever it may be used in our statutes we need not decide. Section 61 of the Real Property Law (Cons. Laws, ch. 50) as to accumulations and section 221 of the Tax Law (Cons. Laws, ch. 60) as to taxable transfers refer generally to such corporar tions. So does section 4 of the Tax Law, but this latter reference was not thought sufficient to cover the real property of an incorporated association of volunteer firemen (Sec. 4, subd. 8). Yet the provision that formerly existed as to the amount that might be given by will to a body incorporated under chapter 397 by one having a wife, child or parent has been repealed very possibly with the idea that the matter is sufficiently covered by section 17 of the Decedent Estate Law (Cons. Laws, ch. 13). Be that as it may, it is certainly a charitable corporation and this is a charitable bequest in the broader sense of the term.

• The doctrine of charitable uses involving the idea of a trust and indefinite beneficiaries did not become part of the law of New York. (Holmes v. Mead, 52 N. Y. 332 .) We thought it better to limit a charitable gift in perpetuity to those instances where it was made absolutely

The bequest we are considering was given for the advancement of an object of general public utility. It was for a public purpose even if this purpose was not charitable within the common and narrow sense of the words. (British Museum v. White, 2 Sim. & Stu. 596.) It does carry the implication of public benefit, and “ when the purpose accomplished is that of public usefulness unstained by personal, private or selfish considerations, its charitable character insures its validity.” (Matter of MacDowell, 217 N. Y. 454 , 460.) The mere fact that the gift is intended as a memorial does not affect its public character. (Wilcox v. Attorney-General, 207 Mass. 198 .)

It being, therefore, for a charitable purpose, to a corporation authorized to receive it, the hose company held this legacy for ten years. It took it for the purpose of its organization. To this end it was bound to devote it. To divert it to other purposes would, have exceeded its powers. To do so would subject it to action by the state. (Matter of Griffin, 167 N. Y. 71 ; Mormon Church v. U. S., 136 U. S. 1 , 57.)

In 1915 the village of Batavia was dissolved and the city of Batavia took its place. It was determined that the city should have a paid fire department. The Richmond Hose Company as a consequence decided to dissolve and voluntary proceedings for that purpose were begun. A contest immediately arose as to the disposition which should be made of Mrs. Kenny’s legacy and it is to settle that contest that this action was begun.

As this bequest was of personal property, assuming it was upon a condition subsequent, the condition would not become operative unless upon its breach there was a gift over and a general gift of the residue is not such a gift

It is said, however,- that the gift to the hose company was subject to a conditional limitation. The contingency which limited the title of the company has arisen. Therefore the title vests either in Mr. Sherman or in him and in-the next of kin of Mr. Atwater. It is difficult to see any basis for the first claim. .Concededly, the limitation over, if one there be, was to them as individuals and not as trustees. Whatever title vested in them on Mrs. Kenny’s death vested in them as tenants in common. Such an expectant estate is descendible and alienable. But unless some estate did in fact vest in one or both, we need not discuss their respective rights. It is, however, just to note that Mr. Sherman disclaims any desire to take the fund for his individual benefit. He wishes to use it for such charities as he believes Mrs. Kenny would approve.

Is the gift which vested in the hose company, therefore, subject to a conditional limitation? Was that the intention of the testatrix? Does the language of the will require such a construction? If “ the legacy shall lapse or fail or for any cause not take effect.” It is conceded that at the time of Mrs. Kenny’s death it neither lapsed nor failed and that it did take effect.. But it is said that a condition is to be implied and if at any time thereafter the legatee was dissolved, then the legacy failed and the condition was broken. We cannot think so. In construing the will it is to be remembered that such conditions are not favored. The intention to create them must clearly appear. (Rose v. Hawley, 118 N. Y. 502 .) The gift to the hose company is absolute in its terms. As we have seen it creates no trust. It is true the principal is to be kept intact but the income is to be used for fire purposes. We cannot find that such a gift has ever been held to impose a condition, (Mormon Church v. U. S., 136

We have left, therefore, the conflicting claims of the members.of the hose company to whom the Special Term awarded the fund and the city of Batavia to whom it was

In this state jurisdiction on its behalf -to supervise the due administration of corporations has been confided in the Supreme Court. To it was given power to prevent the dissipation of their funds. When dissolution carné it either appointed officers to see that those funds were properly distributed, or itself provided for such distribution. In the case of a charitable corporation it would require the personal property to be applied to such charitable purposes as the state might direct. In 1893, however, by the so-called Tilden acts, greater power was conferred upon it. These acts (now section 12 of the Personal Property Law and section 113 of the Real Property Law) did more than make applicable to this state the doctrine of charitable uses. They authorized the court itself to apply the cy pres rule not only where a trust existed but where property had been devised or

Such is the situation in the case at bar. Asked to award this fund to individuals, the court has refused so to do. It has held that it is impressed with a public trust. It has said that it results from a gift for charity. It has determined that to award it to the city of Batavia, to be held in trust for fire protection will most effectually accomplish the general purpose of the bequest under which the fund was created. The exercise of the cy pres doctrine always involves a large measure of discretion. Nothing in the record before us shows the improper exercise of that discretion.

The judgment appealed from should be affirmed, with costs in this court against the appellants.

The gift to the hose company is absolute. It creates no trust. It does not revert to the Kenny estate. The intention expressed by the testatrix is that it should be kept intact and the income devoted “ for whatever purposes its members acting as an organization may direct ” so long as they might be “ reasonable and proper uses of said company.” She is talking about its uses and purposes de facto as known to her, rather than its uses and purposes de jure. Plainly these words and the surrounding circumstances imply a gift to the Richmond Hose Company because it was

If I understand the Mormon Church Case ( 136 U. S. 1 ) properly, it decides nothing except that Congress had power to forfeit and escheat to the United States the property of the Mormon church obtained or held in violation of the statutes to prevent and punish the practice of polygamy, and is not controlling here on the question of the disposition of the fund.

The legal entity, the corporation which held title, is dead. .As it would have been acting ultra vires had it used the principal — or interest except for the purposes of the organization — so I think that it would be unreasonable to permit the members now -to divide the fund among themselves, free from any legal or equitable obligation in favor of anybody. But in disposing of the money, it must be remembered that so far as Mrs. Kenny was interested in firemen, it was in volunteer firemen as represented by one company. As the

, The judgment of the Appellate Division should be modified in accordance with this opinion and as so modified affirmed, without costs.

By the thirtieth clause of her will Adelaide Richmond Kenny of Batavia, New York, disposed of a legacy of $10,000 as follows:

“ To Richmond Hose Company, No. 2, of Batavia, I give and bequeath Ten thousand dollars, to be kept at all times intact, and the income derived from the safe and judicious investment thereof to be devoted to the reason

The thirty-fourth clause of the will reads as follows:

“ If for any reason the legacies contained in this Will to any of the church societies, to the Young Men’s Christian Association, The Women’s Hospital Association, the Trustees of Union Free School District Number Two of the Town of Batavia, the Batavia .Cemetery Association, Richmond Hose Co. No. 2, or the bequest of Six thousand dollars to the Holland Purchase Historical Society, or any one or more of said legacies, shall lapse or fail, or for any cause not take effect in whole or in part, I give and bequeath the amounts which shall lapse or not take effect to Reverend Addison M. Sherman and Edward W. Atwater, of Batavia, N. Y., or to the survivor in case one of them should die before me. In the use of the same I am satisfied that they would follow what they believe to be my wishes as derived from the will. I impose upon them, however, no conditions, leaving the same to them absolutely and without condition or restriction.”

The will was admitted to probate by the surrogate of Genesee county on the 20th day of March, 1905, and thereafter and on the 10th day of May, 1906, this legacy of $10,000 was paid over to the Richmond Hose Company, No. 2.

Soon after its receipt this legacy was invested in bond and mortgage upon real estate and the income thereof devoted to the purposes of the company.

This company was organized at the village of Batavia in the year 1865 as an unincorporated fire company for the purpose of extinguishing fires. On March 31st, 1883, it was incorporated as part of the volunteer fire department of the village of Batavia, Genesee county, New York. It is a membership corporation of forty-four members who have an equal interest in its assets. It is solvent and has no liabilities.

This case involves the disposition of the $10,000 legacy above referred to which is still intact and in the possession of the hose company.

There are three sets of claimants. The plaintiff claims the fund under clause 34 of the will as a lapsed legacy. The defendant members of the hose company claim it as property of this membership corporation to which they are entitled after dissolution. The city of Batavia claims it under section 12 of the Personal Property Law as the nearest application to the testatrix’s intention. The city was not an original party to the action, but was made a party by the Appellate Division which considered the bequest a charity. It reversed the decision of the trial court which gave the fund to the members of the hose company and awarded the money to the city of Batavia.

In my judgment the trial court was right in the disposition of this legacy. It was a gift outright to the Richmond Hose Company, No. 2. It was not a charitable trust, nor a gift upon condition. Neither did the legacy lapse or fail to take effect under the provisions of clause 34 of the will above referred to.

The legacy in question cannot go to the executors or the plaintiff in this case as the legacy has not lapsed. It was paid over directly to the corporation in 1906 and has been held by the corporation as part of its funds ever since. During this time the corporation has disposed of its income for such purposes as it deemed proper. The legacy to lapse must never vest, something must happen between the time of the making of the will and the death of the testator so that it is impossible for the beneficiary to

The gift to the hose company is absolute and complete. It is “ I give and bequeath $10,000 to the Richmond Hose Company, No. 2 of Batavia.” It is insisted that the words which follow, “ to be kept at all times intact and the income derived from the safe and judicious investment thereof to be devoted to the reasonable and proper use of said company, for whatever purposes its members, acting as an organization, may see fit to direct,” make this a conditional gift, a condition which may act subsequently to divest it.

Assuming, that the hose company did not keep the fund intact and had used some of the principal, this would not, in my opinion, have shifted the legacy to anybody else. There was no gift over in case the condition, if it be one, was broken. Such a provision as this is not enforceable unless there be a gift over in case of breach. A general gift of the residue is not a gift over. (Matter of Arrowsmith, 162 App. Div. 623 ; affd., 213 N. Y. 704 .)

Then again, such a condition as this could not operate to divest the hose company of its property as the failure to comply with the condition, if it be one, was not voluntary, but involuntary and as such could not operate for such a purpose. (Martin v. Ballou, 13 Barb. 119 .) Richmond Hose Company, No. 2, ceased to act as an organization by reason of operation of law and the creation of the city of Batavia. Scovill v. McMahon ( 62 Conn. 378 ) held that a condition was not broken where its fulfillment became impossible because of some act of the sovereign power.

Moreover, to give this fund to an individual after the dissolution of the corporation upon the theory of a condition subsequent would, to my mind, violate the law against perpetuities. (Personal Property Law [Cons.

In the next place I do not consider that this provision in the will created any trust. It is not unlike the provision in Matter of Griffin ( 167 N. Y. 71 , 84) where Cullen, J., said, “ such a gift, though the corporation may be instructed to maintain the principal intact and use the income only for a specific purpose, does not create a trust.”

The cy pres doctrine which was made use of by the Appellate Division only applies to the charitable trusts or bequests mentioned in section 12 of the Personal Property Law. Even if this be considered a bequest for certain purposes it was not a charity within section 12 of the Personal Property Law. (Matter of Shattuck, 193 N. Y. 446 .)

The purposes for which this fund were to be used were neither religious, educational, charitable or benevolent. Neither were the beneficiaries indefinite or uncertain. The law requires that the use shall be public and not for the benefit of private institutions or individuals; it must exclude any right to use the moneys for other than charity or the public generally. It cannot have the effect of a private bounty. These voluntary fire departments, we all know, were as much social organizations as public utilities. Entertainments, parades, dances were part of the attraction; fires were but the occasional excitement. Nothing in this will restricted the use of the money to fire purposes. All this income could have been legally spent on refreshments and music. The intent was to benefit the members, not the public. Mrs. Kenny could have given $10,000 to the hose company absolutely. Nothing in the law would have prevented such a gift. At dissolution and payment of debts the property would go to the members. (Gen. Corp. Law [Cons. Laws, ch. 23], §§ 177, 264, and the stipulated facts in this case.)

My conclusion, therefore, is as follows: The plaintiff cannot take upon any theory of lapsed legacy or gift over upon a condition subsequent; the city of Batavia cannot take as there was no charitable use or trust created and the cy pres doctrine does not apply; the gift to the Richmond Hose Company, No. 2, was an absolute gift and upon dissolution the $10,000 passes like the rest of its property to the members of the corporation.

The judgment of the Appellate Division should be reversed and that of the Special Term affirmed, with costs in all the courts.

His cock, Ch. J., Hogan, Cardozo and McLaughlin, JJ., concur with Andrews, J.; Pound and Crane, JJ., read.dissenting opinions.

Judgment affirmed, etc.