Tumlin v. Troy Bank & Trust Co., 4 Div. 538

• Citation: 61 So.2d 817,258 Ala. 238
• Decision Date: 30 June 1950
• Docket Number: 4 Div. 538
• Parties: TUMLIN et al. v. TROY BANK & TRUST CO. et al.
• Court: Supreme Court of Alabama

Page 817

61 So.2d 817

258 Ala. 238

TUMLIN et al. v. TROY BANK & TRUST CO. et al.

4 Div. 538.

Supreme Court of Alabama.

June 30, 1950.

As Modified on Denial of Rehearing Dec. 18, 1952.

Oliver W. Brantley, Troy, Files Crenshaw and B. P. Crum, Montgomery, Alto V. Lee, III, Dothan, and Chas. A. Ball, Steiner, Crum & Weil and Ball & Ball, Montgomery, and John W. Lapsley, Selma, for appellants.

Marion Rushton, Montgomery, and J. H. Wilkerson, Troy, for appellee bank.

A. A. Carmichael, Atty. Gen., pro se.

Henry Upson Sims and William H. Brantley, Jr., Birmingham, amicus curiae.

FOSTER, Justice.

This is the second appeal in this case (see, Henderson v. Troy Bank & Trust Co., 250 Ala. 456, 34 So.2d 835). The same legal questions are presented and argued. The changes made in the allegations of the bill do not alter the result or control in the consideration of the legal questions.

The provisions of the will and the contentions of complainants are set out on former appeal, to which reference is here made, and they will not be repeated here in detail.

We see no occasion for appellants' counsel to express the desire that we 'face the issue squarely' since we have manifested no disposition not to do so. We simply and plainly did not agree with the contentions then made and now repeated.

The brief asserts that the 'heart of this case' hinges around that feature of the will which provides (Item V) 'At the expiration of twenty years after my death and after all bequests herein shall have been paid as herein directed, my said trustee shall cause to be formed an association to be known and styled as 'The Charles Henderson Educational Association.' This association shall have no capital stock, have its principal place of business in Troy, Pike County, Alabama, and its purpose shall be to encourage and foster education by the erection and equipment of school buildings as hereinafter set forth.' If further provides that the directors or managers of said association shall be three bona fide citizens of Pike County, Alabama, elected annually by the directors of the Troy Bank and Trust Company (which is the trustee). This association shall receive from the trustee the income of the trust estate. The corpus shall be held and managed by the trustee. This income shall be used by the association for the construction and equipment of school buildings within the county of Pike, Alabama. Specific direction is given as to the location of the buildings and their material and the conditions existing to justify any specific location.

Item VI is in substance that at the expiration of twenty years from the date of the organization of said Charles Henderson Educational Association, it shall cease to erect school buildings, and another organization shall be formed called the 'Charles Henderson Memorial Association,' which shall be self-perpetuating and continue indefinitely and its purpose shall be the construction and maintenance of a hospital for the treatment of crippled children. The organization shall be composed of a governing board of six people to be appointed by the trustee. The expiration of their respective terms shall be one, two, three, four, five and six years, and the remaining members shall select the successors. The trustee is directed to continue to manage the corpus and only the income shall be turned over to the association for the construction and maintenance of the hospital, and be expended by the governing board for crippled children according to minute directions.

Quoting from appellants' brief, they 'contend that those directions to pay to 'The Charles Henderson Memorial Association' a non-existent association to be formed at a remote time--violate the rule for the same reasons applicable to the previous directions concerning the Educational Association; that the principle of 'gift over from one charity to another' is not applicable first because of the invalidity of the first gift; secondly, because of the noncharitable character of the first gift, and, thirdly, because of the indefinite lapse of time after the expiration of the life of the Educational Trust and before the possible taking effect of Item Six through the formation of the Memorial Association.'

The argument first advanced by appellants, which we will certainly 'face squarely' as we did on former appeal, is based upon their contention that the question involved is controlled by the principle of cy pres. The argument made now, as before, is that the trust is violative of the rule against perpetuities unless it can be aided by that principle. And that principle stood repudiated in Alabama, though later adopted in the Code of 1940, Title 47, section 145.

The argument is that the Charles Henderson Educational Association is not to be organized until twenty years after the death of Charles Henderson and there is no compulsory process to force its organization provided for either in the will or by law. The argument quotes from Carter v. Balfour's Adm'r, 19 Ala. 814, as follows:

'I do not recognize the doctrine of 'cy pres,' which in substance is, if you cannot find the society specified in the will, or apply the fund to the charity intended by the testator, the court will then apply it to some other charity as nearly analogous to it as possible. The bequests should be paid only to the societies specified in the will, or their authorized agents. If the societies, or either of them did not exist at the time of the testator's death or cannot now be found, organized or known as above stated, then the bequest, to such society or societies should be considered and disposed of as lapsed legacies.'

That statement of the principle has been adhered to, but the doctrine of equitable approximation or deviation now also aided by statute (Code of 1923, section 10438, Code of 1940, Title 58, section 57) has always obtained here and distinguished from cy pres. In many cases the courts draw a distinction between prerogative cy pres and judicial cy pres. Erskine v. Whitehead, 84 Ind. 357; 10 Am.Jur. 676. In our cases what other courts call judicial cy pres, we call equitable approximation. Lovelace v. Marion Institute, 215 Ala. 271, 110 So. 381; Williams v. Pearson, 38 Ala. 299.

In short, this means that when the execution of the trust cannot be administered exactly in accordance with the terms of the trust instrument (the beneficiary being ascertainable), a court of equity may vary such details of administration to secure the object for which the trust was created. Thurlow v. Berry, 247 Ala. 631, 25 So.2d 726; Id., 249 Ala. 597, 32 So.2d 526; Heustess v. Huntingdon College, 242 Ala. 272, 5 So.2d 777; Lovelace v. Marion Institute, supra; King v. Banks, 220 Ala. 274, 124 So. 871; Noble v. First National Bank, 236 Ala. 499, 183 So. 393; Dunn v. Ellisor, 225 Ala. 15, 141 Ala. 700.

Many authorities do not distinguish between cy pres and approximation in the use of terms. 14 Corpus Juris Secundum, Charities, §§ 51, 52, page 512, notes 46, 47, 50 and 51, page 514, note 63. In those cases which declare that cy pres is necessary to sustain the trust, it will be noted on proper analysis that the court is applying what we call approximation (which is judicial cy pres), and in some use the words indiscriminately. Erskine v. Whitehead, supra; City of Philadelphia v. Girard's Heirs, 45 Pa. 9, 25, 9 Wright, Pa., 9, 25, 84 Am.Dec. 470; Codman v. Brigham, 187 Mass. 309, 72 N.E. 1008, 105 Am.St.Rep. 394; Quinn v. Peoples Trust & Savings Co., 60 N.E. 281, 157 A.L.R. 885; Reasoner v. Herman, 191 Ind. 642, 134 N.E. 276; 2 Perry on Trust, section 728, see page 1242, note 54.

It is only the prerogative cy pres which our Court had repudiated. Universalist Convention of Alabama v. May, 147 Ala. 455, 41 So. 515; Carter v. Balfour's Adm'r, 19 Ala. 815; Williams v. Pearson, 38 Ala. 299. We are not now called upon to give effect to section 145, Title 47, Code.

When this situation is understood, it is not difficult at all to maintain the position which the Court in agreement with Justice Stakely stated on the former appeal that the principle of cy pres has no application, meaning of course thereby that principle which this Court has repudiated and called cy pres and which was not an exercise of the judicial power. But this Court has consistently held to the principle that a court of equity in administering a charitable trust has a right to vary the details of such administration so that the trust may be used for the beneficiaries which are named or designated by description. It is wholly immaterial whether that power is called cy pres, as it is in some states, or approximation as it is in Alabama.

Now with respect to the Charles Henderson Educational Association, we note that it is not to be incorporated but to be composed of three men who will be the directors and managers. It will own or hold no property of the trust. It will only receive the income which the trustee shall turn over to it to invest in the construction and equipment of school buildings in Pike County, whose title shall be in the State of Alabama. In no sense is this association of three persons a beneficiary of the trust. The charity intended by the testator is not this association. Such association is but an administrative agency of the trust,--a detail in the process of securing the object for which the trust was created,--building and equipping school houses. It comes squarely within the principle of equitable approximation when a court of equity will appoint the members to constitute such association if it is not done exactly according to the terms of the trust will. The association is but an aid in the administration of the trust, not a beneficiary of it. Codman v. Brigham, supra. The beneficiaries are the public in Pike County to be benefited by the State school buildings.

It is evidently intended to be a part of the public school system of the State and County by constructing and equipping suitable school...