In re Hagan's Will
Decision Date | 06 June 1944 |
Docket Number | 46514. |
Citation | 14 N.W.2d 638,234 Iowa 1001 |
Parties | In re HAGAN'S WILL. VALLEY SAV. BANK v. PENN COLLEGE et al. |
Court | Iowa Supreme Court |
Gamble Read, Howland & Rosenfield, of Des Moines, and C. A Williams, Jr., and Irving C. Johnson, both of Oskaloosa, for appellants.
Truman S. Stevens, of Des Moines, for appellee.
Branner Brody, Charlton & Parker, of Des Moines, for petitioner-appellee.
The ultimate question is whether all or only half the remaining income from a trust estate of about $100,000 is payable to Drake University. This in turn depends on whether Penn College, beneficiary of the other half of the net income, has ceased to exist.
The trust was created by the will of Lottie R. Hagan who died November 1 1941. The will, made in 1930, as changed in 1938 by a codicil, contains certain legacies of personal belongings and $47,500 in money, $20,000 of which are to charitable objects-a church, a hospital for crippled children and a children's home. The remainder of her estate was left in trust under these provisions:
"*** the income of said trust fund remaining in the hands of my Trustees shall be divided equally and turned over to Drake University, Des Moines, Iowa, and Penn College, Oskaloosa, respectively, for the purpose of providing annual scholarships under terms and conditions elsewhere in this will fully set forth and described.
The language more particularly involved here is that italicized by us.
Valley Savings Bank of Des Moines, sole trustee under the will, filed its petition in probate alleging that Penn College has turned over its buildings and other property to Wm. Penn College which proceeded to operate a college in the same buildings, with the same faculty and under the influence of the same church organization; that uncertainty exists as to the true construction of the will and as to who should receive that portion of the income payable by the terms of the will to Penn College. The trustee asked the court to interpret the will and direct it as to how to apply the income.
Penn College and Wm. Penn College answered the petition, denying that Penn College has ceased to exist, but alleging that a new corporation has taken over the ownership and operation of the institution in order to provide for its continued existence and while the name has been changed to Wm. Penn College, the institution remains the same. Drake University filed answer, cross-petition, and petition of intervention, asserting that Penn College has ceased to exist as an educational institution, its assets have become the property of Wm. Penn College, a wholly separate institution of learning, and that the full net income from the trust should be paid to Drake.
Upon the trial, the trustee offered in evidence the articles of incorporation of Penn College and those of Wm. Penn College and rested. The remaining evidence was offered by Penn College and Wm. Penn College. No question was asked any witness by counsel for Drake University. The lower court held that Penn College ceased to exist as an educational institution on June 5, 1933, and that Drake University is entitled to all the net income from the trust. Penn College and Wm. Penn have appealed. The trustee has filed nothing with us except a statement asserting its neutrality as between the claimants to the trust income.
There is no dispute in the facts. The institution formerly known as Penn College was established in Oskaloosa in 1873. Prior to June 5, 1933, it was owned and operated by a nonprofit Iowa corporation, whose affairs were managed by a board of 31 trustees, 15 of whom were appointed by the Iowa Yearly Meeting of Friends, the governing body of the Society of Friends in this state. The 15 so chosen in turn elected 15 additional trustees. The alumni association of Penn College had the privilege of nominating 6 of these additional 15. The thirty-first trustee was the president of the college.
In 1916 some of the college buildings and equipment were destroyed by fire. New buildings to replace those destroyed were erected at a cost of between $400,000 and $500,000. "All of that was raised except about $100,000, which was the debt that hung over the college *** up to the critical time in 1931," when a mortgage for about $65,000 on the real and personal property of Penn College was made for the benefit of certain creditors.
In the winter and spring of 1933 the banks were closed and the college suffered from the effects of the depression. Supporters of the college were largely farmers whose situation was then desperate. The college had about $60,000 of gift notes that could not be collected. Nor was it able to borrow money. There were at least three judgments against Penn College, one for a teacher's salary. Some creditors were threatening to levy upon receipts of the college for tuition. The situation received the attention of almost the entire business population of Oskaloosa, the members of the Yearly Meeting of Friends, trustees, alumni and other supporters of the college.
The minutes of the meeting held by the college trustees on March 6, 1933, recite:
The joint expression of representatives of the Yearly Meeting of Friends, college trustees and members of the community was that the only solution of the college's financial predicament was to organize this new corporation to take over the operation of the college. As directed by the trustees of Penn College, some of their members on March 22, 1933, filed articles of incorporation of Wm. Penn College, which are substantially similar to those of Penn College. Control of both corporations is identical. The trustees of the new corporation are the same in number, chosen in the same manner as those of the older one. Since the formation of the new corporation the same individuals have been trustees of both corporations. The name was changed to Wm. Penn College principally because there was a Pennsylvania College in the state of that name and it was thought best to prefix the word "William" to the name of the Oskaloosa institution.
On June 5, 1933, Penn College made a written lease of all its property to Wm. Penn College at an annual rental of $3000 for a period of 10 years, with privilege of renewal for an additional 10 years. In the lease the lessee agreed "to carry on the operation of the college according to its articles of incorporation." This lease was signed for Penn by Dr. B. F. Andrews as president and C. L. Haworth as secretary of its board, and for Wm. Penn by the same individuals as president and secretary of its board. After June 5, 1933, Wm. Penn College operated the institution. The summer session, commenced on or about that date, was attended by students who had previously arranged with Penn College to attend the session. The college never closed its doors. Teaching was not interrupted. The faculty, curriculum, physical plant, traditions, aims and objects of the institution all remained substantially the same.
In 1934, a beneficiary under the mortgage given by Penn College requested the trustees of the mortgage to foreclose it. This was done. The trustees under the mortgage bid in the mortgaged property at the foreclosure sale and assigned the sheriff's certificates to Wm. Penn College which received the sheriff's deed to all the property. Wm. Penn paid the indebtedness formerly secured by the mortgage and also the unsecured indebtedness, so that all debts of the college have been fully paid except current obligations.
The corporation known as Penn College has not ceased to exist. It has administered and received gifts. A number of donations to the college have been collected by the older corporation and turned over to the newer one. The alumni association of Penn College has also continued to...
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Schenck v. Dibel, 47922
...where the instrument it clear and free from ambiguity no construction is necessary. Klein v. Klein, supra. See In re Will of Hagan, 234 Iowa 1001, 14 N.W.2d 638, 152 A.L.R. 1296. III. The deed was made in 1914 and seven years later was recorded by the grantor. According to the authorities t......