Estate of Wilson, Matter of

Decision Date12 July 1983
Citation59 N.Y.2d 461,452 N.E.2d 1228,465 N.Y.S.2d 900
Parties, 452 N.E.2d 1228, 13 Ed. Law Rep. 110 In the Matter of the ESTATE OF Clark W. WILSON, Deceased. Key Bank et al., Respondents; State of New York et al., Appellants. In the Matter of the ESTATE OF Edwin I. JOHNSON, Deceased. Robert Abrams, as Attorney-General of the State of New York, Respondent; Jonathan G. Blattmachr, Appellant.
CourtNew York Court of Appeals Court of Appeals

Robert Abrams, Atty. Gen. (Lawrence S. Kahn, Peter H. Schiff and Deborah Bachrach, Asst. Attys. Gen., of counsel), for ultimate charitable beneficiaries, appellant in the first above-entitled proceeding. Abigail A. Jones, Annette L. Nazareth, Lenore W. Tucker, Marsha Levick and Anne E. Simon, New York City, for NOW Legal Defense and Educ. Fund, appellant in the first above-entitled proceeding and New York State Nat. Organization for Women and another, amicus curiae in the second above entitled proceeding. Michael Seagriff, Wampsville, and Thomas C. McCobb, Morrisville, for Key Bank, respondent in the first above-entitled proceeding. Biagio J. Di Stefano, as guardian ad litem for the unnamed male beneficiaries, respondent in the first above-entitled proceeding.

Jonathan G. Blattmachr, in person, and Steven Richard Swanson, New York City, for Jonathan G. Blattmachr, as guardian ad litem for unknown male trust beneficiaries, appellant in the second above-entitled proceeding. Robert Abrams, Atty. Gen. (Deborah Bachrach, Peter H. Schiff and Lawrence S. Kahn, Asst. Attys. Gen., of counsel), for respondent in the second above-entitled proceeding.

Wirth H. Koenig, New York City, as guardian ad litem for unknown distributees in the second above-entitled proceeding.

OPINION OF THE COURT

COOKE, Chief Judge.

These appeals present the question whether the equal protection clause of the Fourteenth Amendment is violated when a court permits the administration of private charitable trusts according to the testators' intent to finance the education of male students and not female students. When a court applies trust law that neither encourages, nor affirmatively promotes, nor compels private discrimination but allows parties to engage in private selection in the devise or bequest of their property, that choice will not be attributable to the State and subjected to the Fourteenth Amendment's strictures.

I

The factual patterns in each of these matters are different, but the underlying legal issues are the same. In each there is imposed a decedent's intention to create a testamentary trust under which the class of beneficiaries are members of one sex.

In Matter of Wilson, article eleventh of Clark W. Wilson's will provided that the residuary of his estate be held in trust (Wilson Trust) and that the income "be applied to defraying the education and other expenses of the first year at college of five (5) young men who shall have graduated from the Canastota High School, three (3) of whom shall have attained the highest grades in the study of science and two (2) of whom shall have attained the highest grades in the study of chemistry, as may be certified to by the then Superintendent of Schools for the Canastota Central School District." Wilson died in June, 1969 and for the next 11 years the Wilson Trust was administered according to its terms.

In early 1981, the Civil Rights Office of the United States Department of Education received a complaint alleging that the superintendent's acts in connection with the Wilson Trust violated title IX of the Education Amendments of 1972 (U.S.Code, tit. 20, § 1681 et seq.), which prohibits gender discrimination in Federally financed education programs. The Department of Education informed the Canastota Central School District that the complaint would be investigated. Before the investigation was completed, the school district agreed to refrain from again providing names of students to the trustee. The trustee, Key Bank of Central New York, initiated this proceeding for a determination of the effect and validity of the trust provision of the will.

The Surrogate's Court, 108 Misc.2d 1066, 439 N.Y.S.2d 250, held that the school superintendent's co-operation with the trustee violated no Federal statute or regulation prohibiting sexual discrimination, nor did it implicate the equal protection clause of the Fourteenth Amendment. The court ordered the trustee to continue administering the trust.

A unanimous Appellate Division, 87 A.D.2d 98, 451 N.Y.S.2d 891, Third Department, modified the Surrogate's decree. The court affirmed the Surrogate's finding that the testator intended the trust to benefit male students only and, noting that the school was under no legal obligation to provide the names of qualified male candidates, found "administration of the trust according to its literal terms is impossible." (87 A.D.2d, p. 101, 451 N.Y.S.2d 891.) The court then exercised its cy pres power to reform the trust by striking the clause in the will providing for the school superintendent's certification of the names of qualified candidates for the scholarships. The candidates were permitted to apply directly to the trustee.

Matter of Johnson also involves a call for judicial construction of a testamentary trust created for the exclusive benefit of male students. By a will dated December 13, 1975, Edwin Irving Johnson left his residuary estate in trust (Johnson Trust). Article sixth of the will provided that the income of the trust was to "be used and applied, each year to the extent available, for scholarships or grants for bright and deserving young men who have graduated from the High School of [the Croton-Harmon Union Free] School District, and whose parents are financially unable to send them to college, and who shall be selected by the Board of Education of such School District with the assistance of the Principal of such High School."

Johnson died in 1978. In accordance with the terms of the trust, the board of education, acting as trustee, announced that applications from male students would be accept on or before May 1, 1979. Before any scholarships were awarded, however, the National Organization for Women, filed a complaint with the Civil Rights Office of the United States Department of Education. This complaint alleged that the school district's involvement in the Johnson Trust constituted illegal gender-based discrimination.

During the pendency of the Department of Education's investigation, a stipulation was entered into between the executrix of the will, the president of the board of education, and the Attorney-General. The parties sought "to avoid administering the educational bequest set forth in Article Sixth in a manner which is in conflict with the law and public policy prohibiting discrimination based on sex". The stipulation provided that "all interested parties agree to the deletion of the word 'men' in Article Sixth of the Will and the insertion of the word 'persons' in its place." The Attorney-General then brought this proceeding by petition to the Surrogate's Court to construe article sixth of the will.

The Surrogate found that the trustee's unwillingness to administer the trust according to its terms rendered administrati of the trust impossible. The court, however, declined to reform the trust by giving effect to the stipulation. Rather, it reasoned that the testator's primary intent to benefit "deserving young men" would be most closely effected by replacing the school district with a private trustee.

A divided Appellate Division, 93 A.D.2d 1, 460 N.Y.S.2d 932, Second Department, reversed, holding that under the equal protection clause of the Fourteenth Amendment, a court cannot reform a trust that, by its own terms, would deny equal protection of law. The court reasoned that inasmuch as an agent of the State had been appointed trustee, the trust, if administered, would violate the equal protection clause. Judicial reformation of the trust by substituting trustees would, in that court's view, itself constitute State action in violation of the Fourteenth Amendment. The court determined that administration of the trust was impossible and, in an exercise of its cy pres power, reformed the trust by eliminating the gender restriction.

II

On these appeals, this court is called upon to consider the testators' intent in establishing these trusts, evaluate the public policy implications of gender restrictive trusts generally, and determine whether the judicial reformation of these trusts violates the equal protection clause of the Fourteenth Amendment.

There can be no question that these trusts, established for the promotion of education, are for a charitable purpose within the meaning of the law (see EPTL 8-1.1; see, also, Russell v. Allen, 107 U.S. 163, 172, 2 S.Ct. 327, 27 L.Ed. 397; Butterworth v. Keeler, 219 N.Y. 446, 114 N.E. 803; see, generally, Bogert, Trusts and Trustees [rev 2d ed.], § 375; 4 Scott, Trusts [3d ed.], § 370). Charitable trusts are encouraged and favored by the law (see Bogert, op. cit., § 361), and may serve any of a variety of benevolent purposes (see EPTL 8-1.1). Among the advantages the law extends to charitable trusts are their exemption from the rules against perpetuities (see EPTL 9-1.1; Matter of MacDowell, 217 N.Y. 454, 112 N.E. 177) and accumulations (EPTL 8-1.7) and their favorable tax treatment (see Bogert, Trusts and Trustees [rev 2d ed.], § 264.25; 9B Rohan, N.Y.Civ.Prac pars. 8-1.7[3]--8-1.7[6] ). Moreover, unlike other trusts, a charitable trust will not necessarily fail when the settlor's specific charitable purpose or direction can no longer be accomplished.

When a court determines that changed circumstances have rendered the administration of a charitable trust according to its literal terms either "impracticable or impossible", the court may exercise its cy pres power to reform the trust in a matter that "will most effectively accomplish its general purposes" (EPTL 8-1.1, subd. [c] ). In reforming trusts...

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