Carl J. Herzog Foundation, Inc. v. University of Bridgeport

• Decision Date: 26 August 1997
• Docket Number: No. 15526,15526
• Citation: 699 A.2d 995,243 Conn. 1
• Court: Connecticut Supreme Court
• Parties: , 120 Ed. Law Rep. 1087 CARL J. HERZOG FOUNDATION, INC. v. UNIVERSITY OF BRIDGEPORT.

Page 995

699 A.2d 995

243 Conn. 1, 120 Ed. Law Rep. 1087

CARL J. HERZOG FOUNDATION, INC. v. UNIVERSITY OF BRIDGEPORT.

No. 15526.

Supreme Court of Connecticut.

Argued April 30, 1997.

Decided Aug. 26, 1997.

Frederick S. Gold, Stamford, with whom was Sheila A. Huddleston, Hartford, for appellant (defendant).

John F. Lambert, Greenwich, for appellee (plaintiff).

Ralph G. Elliot, filed a brief for the Connecticut Conference of Independent Colleges, Inc., et al. as amici curiae.

Before BORDEN, BERDON, NORCOTT, PALMER and McDONALD, JJ.

NORCOTT, Associate Justice.

The sole issue in this certified appeal is whether the Connecticut Uniform Management of Institutional Funds Act (CUMIFA), General Statutes §§ 45a-526 through 45a-534, establishes statutory standing for a donor to bring an action to enforce the terms of a completed charitable gift. Because we conclude that the legislature did not intend to establish donor standing under the circumstances of this case, we reverse the judgment of the Appellate Court.

The facts and procedural history of this case are aptly set forth in the Appellate Court opinion from which this appeal ensues. "The plaintiff [Carl J. Herzog Foundation, Inc.] commenced an action against the defendant, the University of Bridgeport, seeking injunctive and other relief in connection with a gift made by it to the defendant. The plaintiff alleged in its revised complaint that prior to August 12, 1986, it made various grants to the defendant 'to provide need-based merit scholarship aid to disadvantaged students for medical related education.' On August 12, 1986, the plaintiff agreed, by letter, to participate in a matching grant program that would provide need-based merit scholarships to disadvantaged students for medical related education on a continuing basis. On September 9, 1986, the defendant wrote a letter accepting the offer of a matching grant of up to $250,000. Over a period of time, the defendant raised the necessary $250,000, which the plaintiff matched in accordance with the agreement. The plaintiff transferred $144,000 on June 26, 1987, and $106,000 on June 28, 1988, to the defendant. The grants were used to provide scholarships to students in the defendant's nursing program. On November 21, 1991, however, the plaintiff was informed that the defendant had closed its nursing school on June 20, 1991.

"Pursuant to the provisions of CUMIFA, the plaintiff alleged that the defendant was an 'institution' within the meaning of General Statutes § 45a-527 (1), that the matching grant constituted 'institutional funds' within the meaning of § 45a-527 (2), and that the letter of August 12, 1986, which set forth the restrictions and conditions of said grant, constituted a 'gift instrument' as defined in § 45a-527 (6). See Yale University v. Blumenthal, 225 Conn. 32, 621 A.2d 1304 (1993).

"The plaintiff's alleged injury is that the funds are no longer being used for their specified purpose. Paragraph fourteen of the revised complaint states: 'The [plaintiff] has been given to understand and believes that the said institutional funds have been co-mingled with the general funds of the [defendant], that said institutional funds are not being used in accordance with the "Gift Instrument" under which said institutional funds were transferred to [the defendant], and that said institutional funds have in fact been spent for general purposes of [the defendant].'

"The plaintiff requested a temporary and permanent injunction, ordering the defendant 'to segregate from its general funds matching grants totaling $250,000,' an accounting for the use of the fund from the date of receipt until present, and a reestablishment of the fund in accordance with the purposes outlined in the gift instrument, and, in the event that those purposes could not be fulfilled, to revert the funds and direct them to the Bridgeport Area Foundation, which is prepared to administer the funds in accordance with the original agreement.

"The defendant moved to dismiss the action for lack of subject matter jurisdiction on the ground that the plaintiff lacked standing. The trial court held that the act did not provide a donor with the right to enforce restrictions contained in a gift instrument, and, therefore, the plaintiff lacked standing to bring the action. The trial court noted that the attorney general, pursuant to General Statutes § 3-125, ¹ could bring an action to enforce the gift, and it dismissed the action." Carl J. Herzog Foundation, Inc. v. University of Bridgeport, 41 Conn.App. 790, 791-93, 677 A.2d 1378 (1996).

The Appellate Court reversed the judgment of the trial court, concluding that General Statutes § 45a-533 provides donors with standing to enforce the terms of a completed gift, even though no such right of enforcement was provided for in the gift instrument. In light of the fact that § 45a-533 (a) provides that the governing board of an institution may release a restriction imposed by the donor in his or her gift instrument with the written consent of the donor, the Appellate Court reasoned that "[i]t would be anomalous for a statute to provide for written consent by a donor to change a restriction and then deny that donor access to the courts to complain of a change without such consent." Id., at 803, 677 A.2d 1378. In other words, the Appellate Court concluded that the statute, although silent on the matter, implicitly confers donor standing on the plaintiff. We disagree.

"Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved." Steeneck v. University of Bridgeport, 235 Conn. 572, 579, 668 A.2d 688 (1995). The sole basis for standing claimed by the plaintiff is CUMIFA, more particularly, § 45a-533 (a). Our task, therefore, devolves into a question of statutory construction. We must determine whether the legislature intended CUMIFA to provide a donor that has made a completed charitable gift to an "institution" as defined by § 45a-527 (1), with standing to bring an action to enforce the terms of that gift where, as here, the gift instrument contained no express reservation of control over the disposition of the gift, such as a right of reverter or a right to redirect.

We begin by noting the common law landscape upon which CUMIFA was enacted. We do so based on the applicability to this case of the well recognized principle of statutory construction that no statute "is to be construed as altering the common law, farther than its words import [and ... a statute] is not to be construed as making any innovation upon the common law which it does not fairly express." (Internal quotation marks omitted.) State v. Luzietti, 230 Conn. 427, 433, 646 A.2d 85 (1994); see State v. Sanchez, 204 Conn. 472, 479, 528 A.2d 373 (1987); Ahern v. New Haven, 190 Conn. 77, 82, 459 A.2d 118 (1983).

At common law, a donor who has made a completed charitable contribution, whether as an absolute gift or in trust, ² had no standing to bring an action to enforce the terms of his or her gift or trust unless he or she had expressly reserved the right to do so. "Where property is given to a charitable corporation and it is directed by the terms of the gift to devote the property to a particular one of its purposes, it is under a duty, enforceable at the suit of the [a]ttorney [g]eneral, to devote the property to that purpose." (Emphasis added.) 2 Restatement (Second), Trusts § 348, comment (f), p. 212 (1959); Attorney General v. First United Baptist Church of Lee, 601 A.2d 96, 98 (Me.1992); see Sarkeys v. Independent School District No. 40, 592 P.2d 529, 533 (Okla.1979) ("[i]t has long been recognized at common law that the [a]ttorney [g]eneral has the duty of representing the public interest in securing the enforcement of charitable trusts"); Wilbur v. University of Vermont, 129 Vt. 33, 44, 270 A.2d 889 (1970) (where no provision in trust instrument for forfeiture or reverter, "the remedy for a breach of trust is by suit at the instance of the [a]ttorney [g]eneral of the state to compel compliance"). At common law, it was established that "[e]quity will afford protection to a donor to a charitable corporation in that the [a]ttorney [g]eneral may maintain a suit to compel the property to be held for the charitable purpose for which it was given to the corporation." (Emphasis added; internal quotation marks omitted.) Lefkowitz v. Lebensfeld, 68 A.D.2d 488, 494-95, 417 N.Y.S.2d 715 (1979). "The general rule is that charitable trusts or gifts to charitable corporations for stated purposes are [enforceable] at the instance of the [a]ttorney [g]eneral.... It matters not whether the gift is absolute or in trust or whether a technical condition is attached to the gift." ³ (Internal quotation marks omitted.) Id., at 495, 417 N.Y.S.2d 715.

"The theory underlying the power of the [a]ttorney [g]eneral to enforce gifts for a stated purpose is that a donor who attaches conditions to his gift has a right to have his intention enforced." Id., at 495-96, 417 N.Y.S.2d 715. The donor's right, however, is enforceable only at the instance of the attorney general; Wier v. Howard Hughes Medical Institute, 407 A.2d 1051, 1057 (Del.Ch.1979) (attorney general "has the exclusive power to bring actions to enforce charitable trusts" [emphasis added] ); Lopez v. Medford Community Center, Inc., 384 Mass. 163, 167, 424 N.E.2d 229 (1981) (common law rule that "it is the exclusive function of the [a]ttorney [g]eneral to correct abuses in the administration of a public charity by the institution of proper proceedings" [emphasis added] ); and the donor himself has no standing to enforce the terms of his gift when he has not retained a specific right to control the property, such as a right of reverter, after relinquishing physical possession of it. See, e.g., Marin Hospital District v. State Dept. of Health, 92 Cal.App.3d 442, 448, 154 Cal.Rptr. 838 (1979) (fact that charity is bound...