Sister Elizabeth Kenny Found. v. National Found., 39053

• Decision Date: 21 February 1964
• Docket Number: No. 39053,39053
• Citation: 126 N.W.2d 640,267 Minn. 352
• Parties: SISTER ELIZABETH KENNY FOUNDATION, INC., Respondent, v. NATIONAL FOUNDATION, Appellant, State of Minnesota, Respondent.
• Court: Minnesota Supreme Court

Page 640

126 N.W.2d 640

267 Minn. 352

SISTER ELIZABETH KENNY FOUNDATION, INC., Respondent, v. NATIONAL FOUNDATION, Appellant, State of Minnesota Respondent.

No. 39053.

Supreme Court of Minnesota.

Feb. 21, 1964.

Syllabus by the Court

1. An order of the district court pursuant to Minn.St. 501.12, subd. 3, which specified that notice of a hearing on a petition for modification of the provisions of a charitable trust be served by mail on named persons did not give such persons the status of parties to the proceeding.

2. A party is entitled to intervention when he would necessarily gain or lose by the legal effect of the entry of a judgment therein if he became a party to the action.

3. The mere hope of being a beneficiary of an application of the cy pres doctrine is not a sufficient interest under Rule 24.01(1), Rules of Civil Procedure, to entitle a person to intervene in cy pres proceedings as a matter of right.

4. The attorney general has the duty of enforcing charitable trusts and a member of the general public without a special interest in the matter is not entitled to enforce such a trust.

5. It cannot be said that the court below abused its discretion under Rule 24.02 in denying an application to intervene.

Randall, Smith & Blomquist and Perry M. Wilson, Jr., St. Paul, for appellant.

Walter F. Mondale, Atty. Gen., Robert A. Albrecht, Sp. Asst. Atty. Gen., St. Paul, Vennum, Newhall, Ackman & Goetz, Norman L. Newhall, Jr. and Jerrold F. Bergfalk, Minneapolis, for respondent.

NELSON, Justice.

Appeal from an order of the Hennepin County District Court denying a motion to intervene in proceedings initiated to obtain modification of a charitable trust.

Cora Belle Salmon, a resident of Westchester County, New York, died in 1951. Her last will, dated January 27, 1951, was admitted to probate and a decree of the surrogate's court of Westchester County settled the estate. The will created a residual trust for the benefit of one May K. Houck and provided that after her death one-fourth of the principal of the trust should be distributed to the Sister Elizabeth Kenny Foundation, Inc. (hereinafter referred to as Kenny) 'to be used for the free treatment of needy victims of polilymalitis (sic) who reside in the State of New York.' The life beneficiary died February 4, 1961, and thereafter under the provisions of the trust the sum of $145,389.75 was delivered to Kenny.

When the decedent executed her will in 1951, shortly before her death which occurred in the same year, Kenny had a clinic in New York City. The major portion of the work conducted by the foundation was devoted to research and to the treatment of victims of poliomyelitis, most of whom were unable to pay. The New York City clinic was closed in 1961 and the operation of said clinic was consolidated with a treatment center maintained by Kenny in Jersey City, New Jersey. Kenny has continued to treat needy victims of poliomyelitis from New York at the Jersey City clinic.

Since 1951, through the development of Salk vaccine, the need for treatment of poliomyelitis has been materially lessened by reason of the reduction in the incidence of the disease. Research has been made virtually unnecessary by reason thereof; there are almost no new acute cases; and most of the patients now receiving treatment are persons suffering from the residual effects of poliomyelitis suffered in the past. For these reasons Kenny is now devoting its energies to the rehabilitation of persons crippled by all sorts of muscular and skeletal diseases or injuries; to research in the prevention of crippling diseases; and to research in the best methods of rehabilitating crippled persons, in accordance with the corporate purposes of the foundation.

Alleging that due to the marked changes in circumstances occurring between 1951 and the present, it has become less practicable and may become impossible to comply literally with the terms of the trust established by Mrs. Salmon's will, Kenny filed a petition pursuant to Minn.St. 501.12, subd. 3, ¹ seeking a modification of the trust.

The petition and one supplementing it, taken together, asked that the district court modify the trust to permit use of the property received by Kenny for treatment of a wider variety of muscular and skeletal diseases and injuries. According to the supplemental petition Kenny presently operates the S. S. Pollak Hospital in Jersey City, which is an 80-bed treatment center serving inpatients and outpatients afflicted with a variety of crippling disabilities and is also the Eastern area office for the foundation. The center is located less than 2 miles from the Holland Tunnel; 7 miles from the Lincoln Tunnel; 15 miles from the George Washington Bridge; and 8 miles from the Narrows Bridge (under construction to link Brooklyn and Staten Island with New Jersey). It is located within a half mile of the New Jersey Turnpike and 10 miles from the Garden State Parkway, which gives direct access to upstate New York. From 1960 to September 1962, 89 patients from New York have been treated at the facilities in New Jersey, most of whom were either hospitalized or treated on numerous occasions at the clinic. Of the 89 New York patients so treated, 64 were suffering from poliomyelitis or its aftereffects.

The original petition requested the court:

'(a) To set a hearing on this petition, and to order what notice shall be given, and to what parties, of such hearing, pursuant to the provisions of Section 501.12(3).

'(b) To order (upon) such hearing that Sister Elizabeth Kenny Foundation, Inc. shall use the distributions coming to it from the Will of Cora Belle Salmon for its general corporate purposes as expressed in Article II of its Articles of Incorporation.'

The supplemental petition requested an order as follows:

'A. Permitting the use of the distribution coming to it from the Will of Cora Belle Salmon for its general corporate purposes as expressed in Article II of its Articles of Incorporation:

'Or, in the alternative,

'B. Directing Sister Elizabeth Kenny Foundation, Inc., to use the distribution coming to it from the Will of Cora Belle Salmon for the free treatment of New York residents who are victims of poliomyelitis or crippled by other muscular or skeletal diseases or injuries;

'Or, in the alternative,

'C. Directing Sister Elizabeth Kenny Foundation, Inc., to use the distribution coming to it from the Will of Cora Belle Salmon for the free treatment of needy victims of poliomyelitis who reside in the State of New York as long as there are a sufficient number of such victims to use the proceeds in that way, but permitting use of any balance remaining from said bequest (or from the income from said bequest) for the treatment of victims of other crippling muscular or skeletal diseases or injuries who reside in the State of New York.'

After the filing of the original petition an order was issued by the District Court of Hennepin County on July 5, 1962, setting a date for hearing on the petition and requiring that notice of the hearing be given interested persons by publication of the order and by mailing copies of the order and the petition to certain persons, including the attorney general of this state and the appellant The National Foundation, Inc. (hereinafter referred to as National).

National, after receiving notice of the proceedings, moved the district court to allow it to intervene as a party to the proceedings in order to assert certain claims which it set forth in a proposed answer. Its motion was submitted upon the grounds that it has a direct, legal, equitable, and economic interest in the proceedings because it stands to gain or lose by the direct legal effect of any judgment which the court may enter therein, whether or not it is a party to the action; that representation by the present parties of National's interest, as well as the interests of the beneficiaries of the trust created by Mrs. Salmon's will, is or may be inadequate; that National's claim to the funds held by Kenny presents questions of law and of fact which are in common with the questions of law and fact relied upon by Kenny in seeking the relief it has requested. National alleges in its proposed answer that it is a corporation organized and existing under the laws of the State of New York; that it is qualified and authorized to do business in the State of Minnesota; that until 1958 its name was 'The National Foundation for Infantile Paralysis' and that it was and is commonly known as 'The March of Dimes'; that until 1958 it was engaged almost exclusively in research concerning poliomyelitis and in the treatment and care of victims of poliomyelitis; that such victims were, and are at the present time, treated and cared for upon a nationwide basis by it; and that it has necessary facilities to comply with the terms of the trust and is willing to do so. On the basis of these allegations National asks the court to direct Kenny to turn over to it all properties received under the trust and to direct it to use such properties for the free treatment of needy victims of poliomyelitis who reside in New York.

After a hearing, at which Kenny and the attorney general appeared in opposition to the motion for intervention, the district court entered its order denying the motion. National has appealed to this court from that order.

National contends that the order dated July 5, 1962, requiring notice of hearing to be given to it determined that it was an interested party to these proceedings; that it is entitled to intervene as a matter of right under Rule 24.01, Rules of Civil Procedure; and that the court abused its discretion in failing to allow intervention under Rule 24.02.

1. National contends that it became a party to the proceedings when the district court required that it be given notice of the proceedings. Minn.St. 501.12, subd. 3, which controls cy pres proceedings in this state, does not make any provision for...