Powers v. First Nat. Bank of Corsicana

• Decision Date: 18 March 1942
• Docket Number: No. 2400-7799.,2400-7799.
• Citation: 161 S.W.2d 273
• Parties: POWERS et al. v. FIRST NAT. BANK OF CORSICANA et al.
• Court: Texas Supreme Court

161 S.W.2d 273

POWERS et al. v. FIRST NAT. BANK OF CORSICANA et al.

No. 2400-7799.

Commission of Appeals of Texas, Section A.

March 18, 1942.

Rehearing Denied April 22, 1942.

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Error from the Court of Civil Appeals for the Tenth Supreme Judicial District.

Suit by Millie Powers and others against the First National Bank of Corsicana, Texas, executor under the will of Bessie I. Hofstetter, deceased, to annul and suspend the provisions of the will of Bessie I. Hofstetter, deceased, which had been admitted to probate, wherein the Third Avenue Presbyterian Church of United States of America at Corsicana, Texas, and Reynold's Presbyterian Orphanage and School, devisees, intervened in behalf of the will and were named as defendants. From a judgment in favor of the defendants in the county court, the plaintiffs appealed to the district court. From a judgment of the district court in favor of the defendants, the plaintiffs appealed to the Court of Civil Appeals. To review a judgment of the Court of Civil Appeals, 137 S.W.2d 839, affirming the judgment of the district court, the plaintiffs bring error.

Judgment of the Court of Civil Appeals affirmed.

Samuels, Foster, Brown & McGee and Cantey, Hanger, McMahon, McKnight & Johnson, all of Fort Worth, and Burns & Hadsell, of Niles, for plaintiffs in error.

Watkins & Mays, of Dallas, Lawrence Treadwell, of Corsicana, Ross B. Lea, of Dallas, and Chris L. Knox, of Corsicana, for Orphans' Home, defendant in error.

J. S. Callicutt, of Corsicana, for Church, defendant in error.

Richard & A. P. Mays and Taylor & McWilliams, all of Corsicana, for Bank, defendant in error.

BREWSTER, Commissioner.

This is a suit by Millie Powers and thirty-six other residents of Canada, Michigan, Illinois, Ohio, Nebraska and Missouri, describing themselves as cousins and heirs at law of Bessie I. Hofstetter, deceased, and suing "on behalf of all other heirs of the said Bessie I. Hofstetter, deceased, similarly situated, and for the use and benefit of such class, * * * a large number of whom reside outside of the United States," in which the plaintiffs seek to "annul and suspend" the provisions of the will of said Bessie I. Hofstetter, deceased, which had been admitted to probate by the County Court of Navarro County, Texas. The First National Bank of Corsicana, executor of the will, was named as defendant. Third Avenue Presbyterian Church of the United States of America at Corsicana, Texas, and Reynold's Presbyterian Orphanage and School, a corporation, devisees, intervened in behalf of the will, and are named as defendants in plaintiffs' second amended original petition. Plaintiffs' attack is directed primarily at paragraphs 4, 5 and 6, of said will, which are as follows:

"Fourth: After the payment of debts and expenses enumerated in items two and three next above, and the expense of probating this will, I hereby will and bequeath and devise unto The First National Bank of Corsicana, Texas, a banking corporation organized under the Federal Banking Act of the United States of America, in trust for the purposes hereinafter stipulated, all of the property of which I may die seized and possessed including real, personal and mixed property, and property of every kind and description, whether in my possession or held in trust for me; and it is my will and my desire that the Trustee aforesaid, shall have the entire management and control of all of said property; and I hereby grant unto said Trustee full power and authority to sell and convey the same, to invest, and reinvest the proceeds thereof from time to time, and to pay all reasonable charges and expenses in connection with the handling, managing, preserving, defending, recovering, caring for, controlling and selling said property, including a fee of ____ upon the gross income derived from said properties to be retained out of said income by the Trustee in full compensation for its service hereunder.

"No bond or other security shall be required of the Trustee herein, in addition to the obligations and requirements imposed upon National Banks under the Federal Banking Laws and amendments thereto authorizing acceptance of trusts by said Banks.

"Fifth: The Trustee, aforesaid, and its successors shall hold said property hereby devised and bequeathed to it in trust as a permanent charity fund and shall invest and reinvest same in revenue bearing real estate or interest bearing securities or in State, County, City or Road District bonds yielding the best rate of interest consistent with the safety of the fund or said fund may be loaned to any National Banking Institution at a reasonable rate of interest in the discretion of the Trustee.

"Sixth: The net income of the public charity fund herein and hereby vested in the Trustee herein shall be expended by the Trustee for worthy objects of charity, including the support of the Christian religion as hereinafter indicated. The charity so dispensed in the relief of poverty shall be without regard to race, color, sex or religious belief, and shall be distributed from time to time in the judgment and discretion of the Trustee; the objects of such charity to be selected by the Trustee. The said Trustee is further authorized and directed to pay out of the income of said trust a reasonable amount annually for the support of the Presbyterian Church of the United States of America at Corsicana, Texas, commonly known as the Third Avenue Presbyterian Church, and also to pay annually a reasonable amount to the Board of Trustees of Reynold's orphanage at Dallas, Dallas County, Texas, said orphanage being conducted under the auspices of the Presbyterian Church of the United States of America. And if in the judgment of the Trustee the income from said Trust shall warrant, said Trustee may make contributions from such income to the above named church and orphanage for permanent improvements.

"The Trustee shall have the power and authority and is hereby directed, out of the income only, if in the judgment of the Trustee the income of the Trust is sufficient after the contributions above provided for, to make loans to ambitious and worthy boys and girls, who are financially unable to secure an education and would otherwise be deprived thereof. Such loans shall be in amounts and upon terms and conditions, and to such boys and girls that may be determined worthy thereof in the discretion of the Trustee, but without regard to residence of the recipients."

The plaintiffs lost in both the county probate court and the district court and upon appeal the judgment of the latter court was affirmed by the Court of Civil Appeals, at Waco. See 137 S.W.2d 839.

As we understand plaintiffs' pleadings and their several briefs, the grounds for their contention that the trust attempted to be set up by the aforesaid provisions is void may be grouped as follows: (1) It creates a perpetuity; (2) it is not made to public charity only, because it intermingles therewith provisions for a private trust; (3) the trust is personal in the trustee, in that the will vests in it a discretion as to objects, persons or classes to whom gifts shall be made; (4) the powers of the trustee, and the beneficiaries of the trust, are so uncertain and the discretion of the trustee so unlimited that the trust could not be administered by a court of equity nor could the attorney general prosecute a suit to enforce it; and (5) even if it should be conceded otherwise to create a public charity, the amounts, purpose and time for distribution of income to the church and orphanage are so uncertain that the two beneficiaries could not sue to enforce it.

By the quoted provisions of her will Mrs. Hofstetter clearly takes her estate out of the channels of trade and commerce for a period longer than a life or lives in being and twenty-one years plus the nine months of normal gestation. Therefore, the will creates a perpetuity, as contended by plaintiffs, and is void because it violates section 26, article 1, of the Constitution of Texas, Vernon's Ann.St., unless it sets up a trust exclusively for public charities, in which event the constitutional restraint has no application. Paschal v. Acklin, 27 Tex. 173. So we shall first consider whether any of said provisions are for a private trust.

That a provision to relieve poverty is a public charity is not open to debate. That the hungry must be fed and the naked clothed has long been accepted by the civilized social conscience the world over. For some time and in many countries it has been recognized as an obligation attaching to the government itself to be discharged by public taxation. It is a duty that enlightened countries make every reasonable effort to perform. For example, while our Constitution says the legislature can make no private grant of public moneys, it empowers that branch of the government to grant aid to indigent and disabled Confederate soldiers and sailors. Art. 3, sec. 51, Texas Const. During the widespread economic distress of the last decade a constitutional amendment was adopted by the people of Texas authorizing the legislature to issue "Bread Bonds" in amount not to exceed twenty million dollars, the proceeds of the sale of which were "to be used in furnishing relief and work relief to needy and distressed people and in relieving the hardships resulting from unemployment." Art. 3, sec. 51a, ibid. This action the legislature promptly took and twenty million dollars was spent, and the bonds are being liquidated from the state treasury. During the same era the Government of the United States poured out billions from the federal treasury to sustain millions of our poverty stricken citizens, the program being financed partly by current taxation and partly by unprecedented expansion of the national debt. The people cheerfully support such measures because the purpose served is vital and presents an undeniable appeal to every humane instinct...