Hardman v. Feinstein

• Decision Date: 30 September 1987
• Citation: 195 Cal.App.3d 157,240 Cal.Rptr. 483
• Court: California Court of Appeals Court of Appeals
• Parties: Paul D. HARDMAN, et al., Plaintiffs and Appellants, v. Dianne FEINSTEIN et al., as Trustees, etc., Defendants and Respondents. A031244.

Page 483

240 Cal.Rptr. 483

195 Cal.App.3d 157

Paul D. HARDMAN, et al., Plaintiffs and Appellants, v. Dianne FEINSTEIN et al., as Trustees, etc., Defendants and Respondents.

A031244.

Court of Appeal, First District, Division 3, California.

Sept. 30, 1987.

Review Denied Dec. 16, 1987.

John Eshleman Wahl, San Francisco, for plaintiffs and appellants.

Louise H. Renne, City Atty., Dennis Aftergut, Burk E. Delventhal, Randy Riddle, Deputy City Attys., San Francisco, for defendants and respondents.

SCOTT, Associate Justice.

This appeal follows the trial court's order sustaining a demurrer to appellants' first amended complaint (complaint) without leave to amend on the ground that appellants do not have standing to bring the action. ¹ We affirm. A resident and taxpayer of a city who has no special interest in a charitable trust does not have standing to bring an action seeking to enjoin mismanagement of the trust, even though the trust is administered pursuant to a city charter and the trustees are city officials.

I Procedural Background

The complaint alleges the following. Appellants, Paul D. Hardman, Enola Maxwell, Raymond Clary, Lee Dolson, Earl Moss, and Stanley Smith, are residents and taxpayers of the City and County of San Francisco (City). Respondents, Dianne Feinstein, Eugene Friend, Leonard Kingsley, George Fitch, Alexander Mehran, Diane Phillips, Harry Brooks, Jr., George Coombe, Jr., Charles de Limur, Marie Detert, Charles Gould, William Hambrecht, George Hart, James Harvey, Walter Horn, John Jacobs, John Jones, Stephanie MacColl, Doris Magowan, Bernice Martin, Gail Merriam, Carl Reichardt, Georgette Rosekrans, William Scott, Jr., Emmett Solomon, Alex Spanos, Phyllis Wattis, Rodney Willoughby, Alfred Wilsey, Florence Wong, and Robert Young, are the trustees of the Fine Arts Museums of San Francisco (Fine Arts Museums), as established by the City charter. As trustees, they are officers of the City, and hold the assets of the Fine Arts Museums, including an enormous collection of valuable artworks, in trust for the residents and taxpayers of City. Respondents have violated the trust in that they have disposed of or given away artworks for inadequate or no consideration, failed to maintain adequate records of acquisition and disposition of artworks, favored socially prominent individuals by giving them possession of artworks on long term "loan" basis, and evaded the civil service system of the City by treating certain employees as not part of the civil service system. Appellants seek injunctive and declaratory relief.

Respondents demurred to the complaint on the ground, among others, that appellants lacked standing to sue to enforce the provisions of a charitable trust. In conjunction with the demurrer, respondents requested the trial court to take judicial notice ² of a report to the board of supervisors on the Fine Arts Museums which contains the history of and information pertaining to the operation of the Fine Arts Museums. The Fine Arts Museums comprise the M. H. de Young Memorial Museum and the California Palace of the Legion of Honor. In 1919, M. H. de Young conveyed his museum buildings and their contents to the park commission of the City by deed of trust. Under the provisions of the trust, the City must operate, insure, and maintain the building and its contents as a museum for the use, benefit, and enjoyment of the people forever. In 1921, Mr. and Mrs. Spreckels conveyed in trust the California Palace of the Legion of Honor and its contents to the City park commissioners as a museum of paintings and sculptures dedicated to the memory of San Franciscans who were killed during World War I. Under the terms of the deed of gift, the City must keep, preserve, and maintain the building and its contents in the manner best befitting the "sentiments of honor, nobility and patriotism which the building is designed to commemorate."

Although initially, both donors vested responsibility for the museums in the City park commission, subsequently, boards of trustees for each museum were created and the museums were conveyed in trust to their respective boards. In 1972, in accordance with the City charter, the two museums were administratively merged to form the Fine Arts Museums of San Francisco, headed by a single board of trustees. The City charter provides that the administration and control of the Fine Arts Museums shall be continued under the conditions imposed by the terms of the respective donations of the museums.

II Discussion

The facts of which the trial court took judicial notice set forth above establish that the Fine Arts Museums is a charitable trust. A charitable trust is defined as: "... a fiduciary relationship with respect to property arising as a result of a manifestation of an intention to create it, and subjecting the person by whom the property is held to equitable duties to deal with the property for a charitable purpose." (Rest.2d Trusts, § 348, p. 210.) Art museums advance education and therefore serve a charitable purpose. (4 Scott on Trusts (3d ed. 1967) § 370, p. 2871.)

Because the beneficiaries of charitable trusts, unlike beneficiaries of private trusts, are ordinarily indefinite, the Attorney General has primary responsibility for the supervision of charitable trusts, and generally he is the proper party to enforce them. (See Uniform Supervision of Trustees for Charitable Purposes Act [Gov.Code, § 12580 et seq.]; Corp.Code, § 5142; Holt v. College of Osteopathic Physicians & Surgeons (1964) 61 Cal.2d 750, 754, 40 Cal.Rptr. 244, 394 P.2d 932; People v. Cogswell (1896) 113 Cal. 129, 136, 45 P. 270; San Diego etc. Boy Scouts of America v. City of Escondido (1971) 14 Cal.App.3d 189, 195, 92 Cal.Rptr. 186.) Other than the Attorney General, only certain parties who have a special and definite interest in a charitable trust, such as a trustee, have standing to institute legal action to enforce or protect the assets of the trust. (Holt v. College of Osteopathic Physicians & Surgeons, supra, 61 Cal.2d at pp. 754-756, 40 Cal.Rptr. 244, 394 P.2d 932; San Diego etc. Boy Scouts of America v. City of Escondido, supra, 14 Cal.App.3d at pp. 195-196, 92 Cal.Rptr. 186; In re Veterans' Industries, Inc. (1970) 8 Cal.App.3d 902, 921-924, 88 Cal.Rptr. 303; see Corp.Code, § 5142.) This limitation on standing arises from the need to protect the trustee from vexatious litigation, possibly based on an inadequate investigation, by a large, changing, and uncertain class of the public to be benefited. (Bogert, Trusts and Trustees (2d ed. 1977) § 411, p. 414.)

Minority trustees of a charitable trust, a group " '... both few in number and charged with the duty of managing the charity's affairs ...' [citation]," have a sufficiently definite and special interest in the trust so as to have standing to file an action to enforce the trust. (Holt v. College of Osteopathic Physicians & Surgeons, supra, 61 Cal.2d at pp. 755-756, 40 Cal.Rptr. 244, 394 P.2d 932.) However, a party who has no interest in a charitable trust other than as a taxpayer and a member of the general public to be benefited does not have the requisite interest. (Pratt v. Security Trust & Savings Bk. (1936) 15 Cal.App.2d 630, 59 P.2d 862.)

Pratt was an action by taxpayers to enjoin the alleged mismanagement of the funds of a charitable trust by the trustee and the board of park commissioners of the City of Los Angeles. The trustor had created the trust by will, donating funds for the construction of certain buildings, including a hall of science and observatory. The court held that although a taxpayer under certain circumstances had a right to sue in a representative capacity, such as a suit alleging the failure on the part of a governmental body to perform a duty specifically enjoined, the taxpayers, merely as beneficiaries of the charitable trust, had no standing to bring an action to enforce the trust. (Id., at pp. 636-640, 59 P.2d 862.)

Accordingly, appellants, who have no special interest in the trust other than as taxpayers and members of the public, do not have standing to bring an action to enjoin the alleged mismanagement of the trust.

Appellants allege that because the trust is administered by City officials pursuant to the City charter, the operation of the trust constitutes...