Booker, Matter of

• Court: Washington Court of Appeals
• Writing for the Court: GREEN; MUNSON, C.J., and THOMPSON
• Citation: Booker, Matter of, 682 P.2d 320, 37 Wn.App. 708 (Wash. App. 1984)
• Decision Date: 30 May 1984
• Docket Number: No. 5306-III-7
• Parties: In the Matter of the Trust of: Leon C. BOOKER. SISTERS OF CHARITY OF the HOUSE OF PROVIDENCE (St. Mary Community Hospital), Appellant, v. COLUMBIA COUNTY HOSPITAL DISTRICT; and Rainier National Bank, as Trustee, Respondents.

Page 708

37 Wn.App. 708

682 P.2d 320

In the Matter of the Trust of: Leon C. BOOKER SISTERS OF CHARITY OF the HOUSE OF PROVIDENCE (St. Mary Community Hospital), Appellant, v. COLUMBIA COUNTY HOSPITAL DISTRICT; and Rainier National Bank, as Trustee, Respondents.

No. 5306-III-7.

Court of Appeals of Washington, Division 3 Panel Two.

May 30, 1984.

As Amended June 27, 1984.

Review Denied Sept. 7, 1984.

Tom Scribner, Robert Zagelow, Minnick, Hayner & Zagelow, Walla Walla, for appellant.

H.N. Woolson, Terry R. Nealey, Woolson & Nealey, Dayton, for Columbia County Hosp.

John M. Reese, Larry B. Siegel, Reese, Baffney, Schrag & Siegel, P.S., Walla Walla, for Rainier Nat. Bank.

GREEN, Judge.

This appeal presents one issue: Did the court err in permitting a deviation from the specific terms of a trust? We answer in the negative.

On May 14, 1969, Leon C. Booker executed a trust naming Columbia County Hospital District as principal beneficiary and Sisters of Charity of the House of Providence in the State of Washington for the benefit of St. Mary Community Hospital in Walla Walla as alternate beneficiary. Rainier National Bank was the designated trustee. At the time this trust was created, the assets were valued at about $700,000.

Mr. Booker died in September 1970. The trust assets were invested by the bank and the returns allowed to accumulate. In 1981 the Internal Revenue Service notified the trustee bank that the exempt status of the trust might be in jeopardy if the funds were not distributed in the near future. At that time the value of the trust estate exceeded $1,000,000.

On September 17, 1981, Columbia County Hospital District filed a petition to secure an interpretation of the following provisions of the trust:

The charitable residuary purpose of this Trust shall be to construct, fully equip and furnish a forty (40) bed Rest Home in the City of Dayton, Columbia County, Washington to be called the BOOKER REST HOME ANNEX, hereinafter called 'Rest Home'. The Rest Home shall consist of twenty (20) single patient rooms and ten (10) double patient rooms with each of the single patient and each of the double patient rooms to include a private bathroom with bathtub. The Rest Home shall also include such accessory rooms and areas including paved parking facilities as are normally provided in first class rest homes. The Rest Home shall be constructed so that it is adjoining or attached to the Columbia County General Hospital and so that its administration and control will be as convenient as may be, to the main offices of the Columbia County General Hospital for efficient operation of the whole complex consisting of the COLUMBIA COUNTY GENERAL HOSPITAL, the BOOKER CONVALESCENT ANNEX and the BOOKER REST HOME ANNEX.

The Rest Home shall be the same architecturally designed type of high quality construction as that used on the BOOKER CONVALESCENT ANNEX and be constructed to meet hospital specifications so that the Rest Home may be used as a hospital if deemed necessary or desirable by the Columbia County Hospital District Commissioners.

* * *

Upon the Trustee being certain the net Trust Estate has grown sufficiently to accomplish the Trust charitable residuary purpose, the Trustee shall authorize the Columbia County Hospital District to accept the acceptable firm bids and enter into written contracts for the Rest Home building construction, equipment and furnishings. Thereafter the Trustee shall reduce to cash and pay the then net Trust Estate to the Treasurer of Columbia County, Washington, ex-officio treasurer of Columbia County Hospital District, to be disbursed by the said Treasurer to construct, equip and furnish the Rest Home. Any excess of funds in the Trust Estate over the final cost of completion of the nursing home shall be distributed to said County Treasurer and shall be paid by the Treasurer to Columbia County Hospital District and used by said District for additional Rest Home equipment, furnishings and supplies.

... [T]he Trustor recognizes certain advance payments to architects and engineers will be required in connection with preparation of plans and specifications prior to calling for bids and to ascertain sufficiency of funds in the Trust Estate. Therefore, when the Trustee has reasonable belief that the net Trust Estate is sufficient to construct, equip and furnish the Rest Home, the Trustee, with no liability to itself, may authorize Columbia County Hospital District to employ a competent hospital architectural firm and the Trustee to pay the reasonable architectural and engineering fees thereby incurred.

The trust also provides:

To determine if sufficient funds are available, the Columbia County Hospital District, Dayton, Washington shall furnish the Trustee with firm bids by a responsible building contractor for the building and responsible equipment suppliers for the necessary nursing home equipment and furnishings.

* * *

At the time the Trustee is reasonably certain the net Trust Estate is sufficient to accomplish the Trust charitable residuary purpose and so advises the Columbia County Hospital District and should it then become known to the Trustee that Columbia County Hospital District does not desire the Rest Home, refuses to agree to construct, equip and furnish the Rest Home in the manner directed herein or at any time should the Trustee absolutely determine it is impossible to accomplish the Trust charitable residuary purpose, Trustor directs the Alternate Beneficiary shall become the beneficiary of this Trust. Provided, however, the said hospital district shall have one year from the date of written notification by the Trustee of the availability of funds to accept the charitable residuary purpose of this Trust and agree to the Trust charitable residuary purpose. Upon the rejection by said hospital district or the failure of said hospital district to accept the charitable residuary purpose within the said one year, the Trustor directs the Alternate Beneficiary shall thereupon become the beneficiary of this Trust.

St. Mary Community Hospital also petitioned on behalf of the alternate beneficiary, the Sisters of Charity, for the benefits conferred upon them under the trust in the event Columbia County Hospital District found it not feasible to proceed with the rest home. If the Sisters of Charity became the beneficiary of the trust, they would be entitled to receive the income.

Following a hearing on November 23, 1981, the court entered an intermediate order which provided: (1) a deviation from the explicit terms of the trust to allow a reduction of not more than 10 units nor less than 30 beds in the rest home be authorized due to changed circumstances; (2) the rest home annex design could differ from the design of the Booker Convalescent Center Annex so long as the rest home was constructed of the same architectural design high quality construction; (3) the design anticipate the remote possibility of use as a hospital; (4) the trustee advance architectural and engineering fees for drafting preliminary plans, specifications and cost estimates; and (5) upon completion of those plans, another hearing be set for final approval.

A subsequent hearing on May 28 and June 4, 1982, resulted in an order permitting the construction of a rest home of 30 or 32 beds instead of 40 beds as provided in the trust; the home be built of structural steel so that it could be converted into a hospital if needed; and each room be furnished and equipped so occupants could move in with just personal effects and clothing. The court also directed the architects to prepare the necessary plans and submit them to contractors for bids. These plans and bids were to be submitted to the court for final approval. If the bids exceeded available trust funds, the trustee was directed to determine if the trust funds are adequate and, if not, pass the funds over to the use of the Sisters of Charity. From this order, the Sisters of Charity (St. Mary Community Hospital) appeal.

It is the position of the Sisters of Charity that the court erred in allowing a deviation from the trust and failing to award the income to them as alternate beneficiary. This position is premised upon the following contentions: (1) The trust has a specific, not general, charitable intent with a gift...