Stearns v. Newport Hospital

• Decision Date: 29 June 1905
• Citation: 27 R.I. 309,62 A. 132
• Parties: STEARNS, Atty. Gen., et al. v. NEWPORT HOSPITAL.
• Court: Rhode Island Supreme Court

62 A. 132

27 R.I. 309

STEARNS, Atty. Gen., et al.

v. NEWPORT HOSPITAL.

Supreme Court of Rhode Island.

June 29, 1905.

Bill in equity by Charles F. Stearns, Attorney General, and others against the Newport Hospital. Heard on demurrer and answer. Case to stand for hearing.

Argued before DOUGLAS, C. J., and DUBOIS and BLODGETT, JJ.

J. Stacy Brown, for complainants. Darius Baker and Rathbone Gardner, for respondent.

DOUGLAS, C. J. The defendant is a corporation established in the city of Newport, under an act of the General Assembly passed February 12, 1873 (Laws 1873, p. 222), of which the first two sections are as follows:

"Section 1. Benjamin Finch, T. Mumford Seabury, George C. Mason, Edward King, George A. Richmond, R. B. Cranston, Henry Ledyard, Samuel Engs, David King, Austin L. Sands, Henry E. Turner, William H. Brickhead, George S. Engs, and their associates who may be hereafter admitted members of the corporation hereinafter created according to the by-laws thereof, are incorporated and made a body corporate and politic by the name and style of the 'Newport Hospital,' for the purpose of establishing and maintaining a hospital in Newport for the purpose of receiving, caring for, and healing the sick or hurt by accident or otherwise, with the rights and privileges and subject to the duties and liabilities provided for corporations in general by the provisions of chapter 139 of the General Statutes.

"Sec. 2. The said corporation may take and receive, hold, purchase and possess real and personal estate, to be used and improved for the erection, support and maintenance of said hospital in the city of Newport: Provided that the income of its real and personal estate together does not in any one year exceed the sum of twenty thousand dollars; and the property and estate of said corporation, both real and personal, shall not at any time be liable to be assessed in the apportionment of any state or town tax."

An act was passed March 10, 1803 (Acts 1893, p. 554), amending section 2 of this act so that it should read as follows:

"Sec. 2. The said corporation may continue to hold all property heretofore given or conveyed to it and shall have power to take and hold all property which may hereafter be given or conveyed to it for the purpose of being invested for or in any way applied to the support and maintenance of said hospital or for the caring for and healing of sick, hurt, injured, or infirm persons in said Newport, and to take and execute all trusts in relation thereto, and to do all things appertaining to the receiving of property and estate and of applying the same to the support and maintenance of said hospital and to the care and healing of sick, hurt, injured, or infirm persons that a natural person could lawfully do. And the property and estate of said corporation, both real and personal, shall be exempt from taxation, provided that the income of its real and personal estate together does not in any one year exceed the sum of fifty thousand dollars."

In November, 1882, after the organization of the defendant corporation under its charter, but before the passage of the foregoing amendment, the will of John Alfred Hazard was admitted to probate in Newport, and by the terms of said will the residue of his estate was devised and bequeathed to the Newport Hospital, its successors and assigns, forever, in trust, as follows:

"(1) To set apart and invest five thousand dollars, raising said sum by sale of my real estate, if necessary, and pay and apply the income thereof to and for the use of Samuel C. Clinton (a man of color who has worked for me many years) as long as he shall live. (2) To set apart and invest, also, ten thousand dollars, raising said sum by selling my real estate, if needful, and pay the income thereof to Mrs. Rebecca Stanley (daughter of Capt. John Wood, formerly of said Newport) for and during her natural life. (3) To forever keep in good order the monuments, graves, ground, and fences of the Easton Burial Lot on my farm at Sachuest Beach, in Middletown in said state. (4) To forever use and apply the whole residue and remainder of said trust property, and the proceeds, rents, issues, profits and income thereof, to and for the receiving, healing, and taking care of sick, hurt, injured, or infirm poor persons at said hospital, free of charge to such poor persons or patients as far as may be, and under and pursuant to such rules and regulations in the premises as the trustees, directors, or managers of said hospital may from time to time in their discretion prescribe forever, the object hereof being to benefit as many such poor persons as practicable, and at the same time provide and secure a permanent source of aid, remedy and relief, to which end the employment of said trust funds and property for the general support and maintenance of said hospital is hereby authorized, so far as may be requisite, to uphold it and preserve it and perpetuate the charity hereby created and designed. Said Newport Hospital corporation, and the trustees, managers, or directors thereof, shall always have power to sell and change the investment of said trust property and every portion and parcel thereof, whenever and as often as it may seem desirable to do so, and to perform every act requisite to effect such sales and changes, holding and investing the proceeds of every such sale upon and in conformity to the trusts herein declared of and concerning said trust property, and with continuous power to sell and change investments as aforesaid.

"But I particularly desire and recommend that no part of my said farm in Middletown shall ever be sold, or in any way aliened or disposed of, except by lease or leases for a term of not more than ten years each from time to time as may seem proper. In case said Newport Hospital shall refuse to accept said trusts, or if ever, from any cause, it cannot be trustee or act or continue to act as trustee hereof, or cannot be compelled to execute said trusts, then it is my will and expectation that new and competent trustees shall be substituted and appointed to take and hold said trust property and perform said trusts, and that the requisite and appropriate proceedings and conveyances shall be ordered in the premises by the Supreme Court of said state or other proper court having equity jurisdiction in such matters."

This bill is brought against the Newport Hospital by the Attorney General, representing the public as beneficiary under the charitable trust created by the will of John Alfred Hazard, and by Patrick J. Boyle in his capacity as mayor of the city of Newport, acting under the direction of a resolution of the city council of said city, which instructs him, in his name as a trustee ex officio of the Newport Hospital, or in the name of the city, to institute proceedings, and also as a taxpayer of the city of Newport for himself and such other taxpayers as may join therein. The bill recites the charter of the defendant and the trust provisions of the will aforesaid, and alleges that at the time of the probate of the will the Newport Hospital could not legally take such a devise and bequest; that the hospital illegally took possession of the property, becoming a trustee in its own wrong, and has ever since remained in the wrongful possession thereof; that, while thus in wrongful possession, the respondent has violated the terms of the trust in that it has expended a portion of the principal of the trust estate; that it has further violated its trust by borrowing money upon the security of the principal of the trust estate, quoting as the foundation of this charge the last account of the treasurer of the hospital, and a statement in a recent report of the trustees to the effect that they had anticipated the further sale of land belonging to the corpus of the trust estate by incurring a debt; that by this use of the principal of the estate it has so diminished the income thereof that it has closed a ward which it formerly conducted for the treatment of contagious diseases, and has refused to open said ward, although requested so to do by the board of health of the city of Newport, alleging a lack of funds available for this purpose; that the city council, relying on the provisions of the Hazard trust to secure treatment of indigent persons suffering from contagious diseases, have made no other provision therefor, and that there is therefore no means of caring for such persons; that the continued expenditure of the principal of the trust estate, and the assumption of obligations in anticipation of the sale of land which is a part of the corpus of the trust estate, will ultimately result in its extinction; that the hospital has received from taxpayers of the city of Newport moneys amounting to upwards of $100,000 for the endowment of free beds for the use of poor persons suffering both from contagious and noncontagious diseases; and that these funds have been so negligently invested that there are now no free beds for contagious cases. The relief asked for is an accounting of the dealings of the respondent with the trust estate, an injunction against the expenditure of any more of the principal of the trust estate, a schedule of the balance and securities held by it for the benefit of the trust, and a list of all notes, mortgages, and other obligations incurred by the respondent and chargeable to the trust estate, and, finally, the appointment of new and competent trustees under the will of John Alfred Hazard. The respondent has filed a demurrer to the bill, on the ground that Patrick J. Boyle, in his several capacities, is not a proper party to this suit, and has also answered, denying certain allegations of fact and claiming certain defences in law.

The questions of law raised are: (1) Is Patrick J. Boyle, in his capacity as mayor of the city of Newport and ex officio trustee of the Newport Hospital, or...