Bennett College v. United Bank of Denver, Nat. Ass'n, 89SC297

• Decision Date: 10 September 1990
• Docket Number: No. 89SC297,89SC297
• Citation: 799 P.2d 364
• Parties: 63 Ed. Law Rep. 1084 BENNETT COLLEGE, Bennett College Foundation, Inc., and Pace University, Petitioners, v. UNITED BANK OF DENVER, NATIONAL ASSOCIATION, Charles W. Ennis, St. John's Episcopal Cathedral, Dumb Friends League Animal Shelter, Metropolitan Opera Guild, Inc., and Marist College, Respondents.
• Court: Colorado Supreme Court

Page 364

799 P.2d 364

63 Ed. Law Rep. 1084

BENNETT COLLEGE, Bennett College Foundation, Inc., and Pace

University, Petitioners, v. UNITED BANK OF DENVER, NATIONAL ASSOCIATION, Charles W.

Ennis, St. John's Episcopal Cathedral, Dumb

Friends League Animal Shelter,

Metropolitan Opera Guild,

Inc., and Marist

College,

Respondents.

No. 89SC297.

Supreme Court of Colorado,

En Banc.

Sept. 10, 1990.

Rehearing Denied Nov. 13, 1990.

Ireland, Stapleton, Pryor & Pascoe, P.C., Monte Pascoe, Margaret L. Toal-Rossi, Jennifer A. Ostom, Denver, for petitioners.

Davis, Graham & Stubbs, Richard W. Daily, Susan K. Morath, Denver, for respondents St. John's Episcopal Cathedral, Dumb Friends League Animal Shelter, and Metropolitan Opera Guild, Inc.

No Appearance, on behalf of respondents United Bank of Denver, Nat. Ass'n., Charles W. Ennis, and Marist College.

Justice VOLLACK delivered the Opinion of the Court.

Bennett College, Bennett College Foundation, Inc., and Pace University (the Colleges) petitioned for certiorari review of the court of appeals decision in United Bank of Denver v. St. John's Episcopal Cathedral, Nos. 87CA1050 & 87CA1051 (Colo.App. March 23, 1989) (unpublished opinion). In United Bank of Denver, the court of appeals affirmed the Denver probate court's summary judgment entered against the Colleges. We granted certiorari to consider whether the court of appeals properly applied the doctrine of collateral estoppel. ¹ We affirm.

I.

A.

In 1970, Margaret Collbran, an alumna of Bennett College, established a trust, with the United Bank of Denver as the trustee (the Collbran Trustee), providing that upon her death the remainder of the trust would be "divided into equal parts and distributed outright to each of the following organizations" in existence at the time of her death: St. John's Episcopal Cathedral, Dumb Friends League Animal Shelter, Metropolitan Opera Guild, Inc., and Bennett College.

In May 1977, Bennett College, an all-women's college, filed for bankruptcy in federal district court, which adjudicated Bennett College bankrupt in October 1977. By March 1978, the bulk of Bennett College's assets had been liquidated and disbursed to creditors. The bankruptcy estate was closed in 1984.

Following Collbran's death on February 22, 1986, the Collbran Trustee petitioned the Denver Probate Court for instructions on whether or how it should distribute Bennett College's interest in the trust corpus. In the probate proceedings, St. John's Episcopal Cathedral, Dumb Friends League Animal Shelter, and Metropolitan Opera Guild (the Charities) argued that Bennett College's interest in the trust corpus should be distributed equally among them because Bennett College is no longer in existence. ² Bennett College Foundation, Inc., (Bennett Foundation), and Bennett College, which has not received students since 1977 although the state of New York has not divested the college of its school charter, and Pace University ³ argued that Bennett College was still in existence at the time of Collbran's death.

The Charities subsequently filed two motions for summary judgment against the Colleges, arguing that they were collaterally estopped and judicially estopped from asserting that Bennett College was still in existence at Collbran's death. The motions for summary judgment were based on previous New York court cases following the adjudication of Bennett College's bankruptcy in which the college's entitlement to funds unrelated to the Collbran trust was questioned. The probate court granted the Charities' motions for summary judgment, and the court of appeals affirmed.

B.

Because of the limited nature of our review in this case, see note 1, supra at 365, we consider only the New York case on which the probate court and court of appeals relied in holding that the Colleges were collaterally estopped from asserting that Bennett College was still in existence at the time of Collbran's death.

In 1937, Margaret Gage, a New York resident and alumna of Bennett Junior College established a trust fund and named Bennett College as its beneficiary. ⁴ The trust provided that another charitable beneficiary could be named "[i]n the event that [Bennett College] cease[s] to exist, whether by reason of dissolution, merger, consolidation or otherwise." Bankers Trust Company (the Gage Trustee) eventually was named the trustee. The Gage Trustee stopped disbursing trust moneys to Bennett College in September 1977, after the college had filed for bankruptcy in May 1977.

In May 1979, the Gage Trustee initiated a proceeding in the Supreme Court of New York for, inter alia, a ruling that Bennett College had ceased to exist by virtue of the college's bankruptcy and the subsequent sale of its assets, and that the Gage Trustee was no longer obligated to disburse trust moneys to Bennett College. Notice of the proceeding was served on Bennett College through the college's last president, J.W. Nystrom, the bankruptcy trustee for Bennett College (the Bankruptcy Trustee), and the New York Attorney General. ⁵

In July 1979, the Gage Trustee, the Bankruptcy Trustee, and apparently the New York Attorney General entered into a stipulation by which the Gage Trustee agreed to pay $3,668.22 to the Bankruptcy Trustee. ⁶ The amount represented the net moneys that were payable to Bennett College but had not been paid because of the Gage Trustee's concern over whether the college continued to exist as required by the Gage trust. Also in July 1979, the Supreme Court of New York issued a memorandum decision finding that Bennett College had "ceased to exist" and permitting the Gage Trustee to substitute other beneficiaries to the Gage trust in accordance with the trust's terms.

In September 1979, the Supreme Court of New York approved the July 1979 stipulation, and, after referring to its July 1979 memorandum decision, "ORDERED, ADJUDGED AND DECREED that Bennett College ... has for the purposes of [the Gage] Trust ceased to exist."

II.

The Colleges argue that the court of appeals and probate court erroneously applied the doctrine of collateral estoppel in this case. We disagree.

Collateral estoppel, or issue preclusion, bars relitigation of an issue that was determined at a prior proceeding if: (1) the issue precluded is identical to an issue actually determined in the prior proceeding; (2) the party against whom estoppel is sought was a party to or was in privity with a party to a prior proceeding; (3) there was a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. E.g., City of Colorado Springs v. Industrial Comm'n, 749 P.2d 412, 414 (Colo.1988); Industrial Comm'n v. Moffat County School Dist. RE No. 1, 732 P.2d 616, 619-20 (Colo.1987); United States v. Jesse, 744 P.2d 491, 503-04 (Colo.1987). The issue on which preclusion is asserted must have been actually litigated and necessarily adjudicated in the prior proceeding. Jesse, 744 P.2d at 503.

A.

We first consider whether the issue of Bennett College's existence that was decided in the New York proceeding is identical to the issue before the Denver Probate Court.

The Gage trust provided that another charitable beneficiary could be named "[i]n the event that [Bennett College] cease[s] to exist, whether by reason of dissolution, merger, consolidation or otherwise." In its "Petition for Voluntary Accounting and Construction of Deed of Trust," the Gage Trustee specifically requested that the New York Supreme Court determine "for purposes of the administration of said trust [that] Bennett College ... ceased to exist on or about August 8, 1977."

The Collbran trust provided that upon Collbran's death the trust would be "divided into equal parts and distributed outright to the [named] organizations that are in existence" at the time of her death. In its "Petition for Order Ascertaining Beneficiaries of Trust," the Collbran Trustee stated that the Charities had requested distribution of the trust corpus to the Charities only, because Bennett College was not in existence at the time of Collbran's death. The Collbran Trustee also stated in the petition that it was "uncertain" whether it was required to distribute a one-fourth share to Bennett College because, inter alia, the Gage Trustee had learned that Bennett College had been adjudicated a bankrupt, that the college had not conducted classes or functioned as an academic institution since fall 1977, and that in the Gage trust court proceedings the New York Supreme Court had found that, for purposes of the Gage Trust, the college had ceased to exist. The Collbran Trustee requested through the petition that the Denver Probate Court determine the beneficiaries of the trust and instruct the Collbran Trustee on how to distribute the trust assets to the beneficiaries.

The Colleges argue that the issues in the two court proceedings are different because "[e]ach trust is unique, which requires that each be examined independently." Specifically, the Colleges argue that the issue in the Gage trust court proceeding must have involved a different issue because the document creating the Gage trust defined cessation of existence as "dissolution, merger, consolidation or otherwise," and the document governing the Collbran trust does not define "existence." We disagree.

A comparison of the facts in the Gage trust court proceedings and the court proceedings in this case demonstrates that the issue before the New York Supreme Court was identical to the issue before the Denver Probate Court: whether or not Bennett College was in existence. The Gage trust deed's definition of "exist" did not cause the issue in the New York court proceedings to be different from the issue before the Denver Probate Court. The deed's definition of "exist"--"dissolution, merger, consolidation or otherwise"--is too broad to differentiate the Gage trust deed's use of "e...