Agan v. U.S. Nat. Bank

• Decision Date: 19 July 1961
• Citation: 227 Or. 619,363 P.2d 765
• Parties: Hart AGAN, Fred Breckon, J. Vernon Burke, Hector L. Fox, Kenneth Hall, F. L. Pattle and Pelle R. Clarke, on behalf of themselves and all other persons now in the employ of Journal Publishing Company or who are associated with the management of the Oregon Journal, Appellants, v. UNITED STATES NATIONAL BANK, as executor of the Last Will and Testament of Maria C. Jackson, Deceased, as trustee of the Jackson Foundation, and as trustee of the Philip Ludwell Jackson Trust; David L. Davies, as executor of the Last Will and Testament of Maria C. Jackson, Deceased, as trustee of the Jackson Foundation and as trustee of the Philip Ludwell Jackson Trust, and William M. Knight, as trustee of the Jackson Foundation and as trustee of the Philip Ludwell Jackson Trust, Respondents.
• Court: Oregon Supreme Court

Page 765

363 P.2d 765

227 Or. 619

Hart AGAN, Fred Breckon, J. Vernon Burke, Hector L. Fox Kenneth Hall, F. L. Pattle and Pelle R. Clarke, on behalf of themselves and all other persons now in the employ of Journal Publishing Company or who are associated with the management of the Oregon Journal, Appellants, v. UNITED STATES NATIONAL BANK, as executor of the Last Will and Testament of Maria C. Jackson, Deceased, as trustee of the Jackson Foundation, and as trustee of the Philip Ludwell Jackson Trust; David L. Davies, as executor of the Last Will and Testament of Maria C. Jackson, Deceased, as trustee of the Jackson Foundation and as trustee of the Philip Ludwell Jackson Trust, and William M. Knight, as trustee of the Jackson Foundation and as trustee of the Philip Ludwell Jackson Trust, Respondents.

Supreme Court of Oregon, Department 2.

Argued and Submitted June 6, 1961.

Decided July 19, 1961.

Don S. Willner, Portland, argued the cause for appellants. With him on the brief were Lenon & Willner and Robert A. Bennett, Portland.

Cleveland C. Cory, Portland, argued the cause for respondents. With him on the brief were Hart, Rockwood, Davies, Biggs & Strayer, Portland.

Before McALLISTER, C. J., and SLOAN, O'CONNELL and LUSK, JJ.

O'CONNELL, Justice.

This is a suit brought against the executors and trustees of the estates of Maria C. Jackson and Philip Ludwell Jackson by certain employees of the Journal Publishing Company 'on behalf of themselves and all other persons now in the employ of Journal Publishing Company or who are associated with the management and operation of the Oregon Journal.' The suit is brought to restrain the defendants from administering the trusts in a manner alleged to be in violation of the terms of the trusts.

The trial court entered a decree of dismissal pursuant to its order sustaining the defendants' demurrer to plaintiffs' complaint after plaintiffs declined to plead further.

Plaintiffs allege that the defendant trustees failed to carry out certain directions contained in each of the following parts of the testamentary trusts created by the settlors:

The Maria C. Jackson Trust

'2. The net income from the trust shall be distributed by the trustees for use within the State of Oregon for charitable, educational or eleemosynary purposes and for the advancement of public welfare. The trustees shall have wide discretion in the selection of the particular purposes for which said distribution shall be made and shall select beneficiaries as they shall deem to be most appropriate and best calculated to promote the welfare of the public of the City of Portland or the State of Oregon, or both. * * *

'* * * I specifically direct that when and if my executors or trustees, or my executors and trustees, as the case may be, shall in their sole discretion deem it to the best interests of The Oregon Journal as a continuing local newspaper of the character described in paragraph 3 of Article VI of my said last will and testament or to the best interests of the trust estate to make such sale of any stock of Journal Publishing Company they shall exercise their discretion to make such sale in such manner that, if possible, the ownership and control of Journal Publishing Company and the newspaper which it operates shall be retained on a local basis, preferably in the hands of persons who are then in the actual employ of Journal Publishing Company or who are associated with the management and operation of the paper; and I direct that in any disposition of such stock the purpose herein stated shall be carried out even though the amount which may be realized through such sales may be very substantially less than might be obtained if such stock or the paper owned by said Journal Publishing Company were to be sold in a different manner or to other purchasers.'

The Philip Ludwell Jackson Trust

'* * * Without in any way limiting the broad powers herein granted to the trustees to sell and dispose of the assets of the trusts, I express the wish, which shall not be construed to be mandatory or binding upon the trustees, that if any stock of Journal Publishing Company, an Oregon corporation, shall be included in the assets of the trusts, the trustees shall in any disposition of such stock endeavor to do so in a manner such as to perpetuate the Oregon Journal, the newspaper published by Journal Publishing Company as a newspaper which conforms generally to the standards of that newspaper since the founding thereof by my late father, Charles Samuel Jackson. If it may be done without jeopardy to the standing of said newspaper the trustees shall endeavor to favor and give preference to persons actually in the employ of Journal Publishing Company engaged in the publishing and operation of the newspaper. I appreciate that at this time I cannot adequately define the processes to be adopted by the trustees in carrying out the policies of administration with respect to the stock of the Journal Publishing Company expressed in this paragraph and for that reason I give to the trustees broad powers to be exercised in their discretion in accomplishing the purposes and policies expressed in this article.'

The alleged acts constituting the violation of the trusts were described in the complaint, as follows:

'(a) Causing the value of the trust property to depreciate substantially in a manner threatening the retention of the ownership and control of the Journal Publishing Company and the newspaper which it operates on a local basis in that defendants have caused the circulation of the Oregon Journal to decrease substantially, have caused advertising revenues of the Oregon Journal to decrease substantially, have caused the majority of the staff of the Oregon Journal to go on strike and have placed the Oregon Journal in a serious financial condition.

'(b) Entering into agreements with non-local interests which in some measure remove control of the Journal Publishing Company and the newspaper which it operates from the local basis.'

The demurrer to the complaint was based upon the following grounds: (a) that plaintiffs had no legal interest in the enforcement of the trust; (b) that the trust being charitable the Attorney General was a necessary party plaintiff; (c) that there were no facts showing that defendants have abused their discretion; (d) that even assuming an abuse of discretion, plaintiffs have no legally protected interest in the absence of allegations that defendants have decided to sell the stock of Journal Publishing Company, that plaintiffs are ready willing and able to purchase the stock at a reasonable price, and that defendants are about to act arbitrarily in carrying out a sale of the stock to non-local interests.

The trial court sustained the demurrer on the ground that plaintiffs' interest was not substantial enough to enable them to bring suit. The trial court treated the case as a suit to enforce a charitable trust and since, as it correctly concluded, charitable trusts are enforceable only by the Attorney General and not by a private citizen, it held that plaintiffs were not entitled to maintain this suit for enforcement of the trusts.

Plaintiffs take the position that the provisions of the trust giving the Journal Employees a preference right to purchase the stock made them beneficiaries of a private trust, it being conceded that the other provisions of the trust were charitable in character.

We are of the opinion that the provisions of the will referred to did not create a legally enforceable interest in the plaintiffs. To qualify as beneficiaries of the trusts in question plaintiffs must prove that the settlors intended to create an enforceable equitable interest in the class which plaintiffs purport to represent. 1 Restatement of Trusts 2d, §§ 25, 127 (1959). Neither trust will bear such a construction. In both trusts the employees and persons associated with the management of the newspaper were designated for preference in treatment merely as an incident of carrying out the settlors' purpose to keep the control of the paper on a local basis. The preference was to be given the class only in the event that the trustees held stock of the Journal Publishing Company and only if they elected to sell the stock. The language used by both settlors in providing for the contingency of sale is couched in broad discretionary language. This is a factor indicating that the intent was not to bestow an enforceable interest in the alleged beneficiaries. See 1 Bogert, Trusts and Trustees, § 48 at 347 (rev. ed. 1951).

Furthermore, the language is precatory in nature. The Philip Ludwell Jackson trust expressly provides that the conditions attached to the trustees' power to dispose of the stock is only the expression of the settlor's 'wish' and that such conditions 'shall not be construed to be mandatory or binding upon the trustees.' Although the trust further provides that the trustees 'shall endeavor to favor and give preference' to the class designated, this provision, when read with the other provisions in the same paragraph relating to the perpetuation of the local control of the paper, indicates an intent merely to guide the trustees and not to command them to act for the benefit of the class.

Aiding in this construction are other factors. The interest which the class is to receive is left unmeasured. Indefiniteness in this respect is regarded as reflecting an intent not to create a trust interest. 1 Bogert, Trusts and Trustees, § 48 at 346 (rev. ed. 1951). The failure to describe the beneficiaries with certainty is another factor arguing against the existence of a trust. 1 Bogert, Trusts and Trustees, § 48 at 345 (rev. ed. 1951).

The persons who were intended to have the preference in purchasing the Journal stock held by the trustees would not be known until the trustees elected to dispose of it, the trust providing that the preference was to be given to those who were 'then [at the time of...