US on behalf of US Coast Guard v. Cerio

• Decision Date: 31 August 1993
• Docket Number: Civ. A. No. 93-42-A.
• Citation: 831 F. Supp. 530
• Court: U.S. District Court — Eastern District of Virginia
• Parties: UNITED STATES of America, on Behalf of the UNITED STATES COAST GUARD, Plaintiff, v. Daniel A. CERIO, as Executor of the Estate of Robert T. Alexander, et al., Defendants.

831 F. Supp. 530

UNITED STATES of America, on Behalf of the UNITED STATES COAST GUARD, Plaintiff, v. Daniel A. CERIO, as Executor of the Estate of Robert T. Alexander, et al., Defendants.

Civ. A. No. 93-42-A.

United States District Court, E.D. Virginia, Alexandria Division.

August 31, 1993.

J. Christopher Kohn, Robert M. Hollis, James J. Faughnan, Attorneys, Civil Div., Commercial Litigation Branch, U.S. Dept. of Justice, Andrew S. Pessin, General Law Div., Office of the Chief Counsel, U.S. Coast Guard, Washington, DC, Richard Parker, Asst. U.S. Atty., Alexandria, VA, for plaintiff.

Fred C. Alexander, Jr., McGuire, Woods, Battle & Boothe, Alexandria, VA, for defendants.

MEMORANDUM OPINION

ELLIS, District Judge.

I.

This is a rare case. How often, after all, does the recipient of a generous bequest object to that bequest and threaten to reject it on the ground that it is too generous? Yet that is precisely what has occurred here. Indeed, this is essentially a case of looking the gift horse in the mouth and finding it too good to accept as is.

More particularly, this unique dispute concerns the validity and disposition of a retired Coast Guard Captain's testamentary gift to the United States Coast Guard Academy (the "Academy") for the purpose of establishing a trust fund, the annual income of which is to be awarded each year to the graduating cadet who attains the highest grade point average in chemistry and physics while enrolled at the Academy. So large is the gift — the trust corpus is estimated to be worth over $1 million — that the proposed cadet award would range from $65,000 to $130,000 annually. Such an annual cadet award, according to the Coast Guard, would seriously disrupt the Academy's operations and interfere with the attainment of its goals. Unless the trust is somehow modified, the Coast Guard claims it would be compelled to refuse the gift. Seeking to avoid this result, the United States brought this action on behalf of the Coast Guard seeking application of the equitable doctrine of cy pres to change the terms of the trust so that the Coast Guard Academy can accept the testamentary trust in a modified form. Not surprisingly, the testator's heirs-at-law, the defendants here, argue that the trust should either be performed as written or held to fail, in which event, the trust funds would pass to them under Virginia's intestate succession laws.

This matter came before the Court for trial on the merits on August 4, 1993. A total of seven witnesses presented live testimony, seven on behalf of the Coast Guard and two on behalf of the heirs. A tenth witness appeared by deposition. In addition to testimony, numerous documents were admitted into the record as evidence, including Captain Alexander's complete service record. Pursuant to Rule 52(a), Fed.R.Civ.P., the Court sets forth here its findings of fact and conclusions of law. For the reasons that follow, the Court concludes first that the terms of the trust are subject to alteration under the doctrine of cy pres; and second, that the alteration of those terms, as set forth here, satisfies the doctrine as it is both faithful to the testator's purposes and consistent with the Academy's goals.

II. FINDINGS OF FACT

Robert T. Alexander, a resident of the Commonwealth of Virginia, died testate on April 18, 1988. A retired Coast Guard Captain, Alexander had spent his entire thirty-four year professional career with the Coast Guard. He began his career with the Coast Guard as a cadet at the Academy in 1928, following in the footsteps of his half-brother, George C. Alexander, who graduated from the Academy in 1904. Captain Alexander graduated second in his Academy class, received a Bachelor of Science Degree in Engineering, and went on to become a successful Coast Guard officer. By the time he retired from the Coast Guard in 1962, Captain Alexander had risen to the rank of Captain.¹ During his Coast Guard career, Captain Alexander also earned a Master of Science degree in Physics from the University of Michigan in 1940, and a second Bachelor of Science degree in Engineering from the George Washington University in 1953.

Captain Alexander's assignments as a Coast Guard officer during his thirty-four year career often required application of his engineering and scientific skills. Three years after his graduation, Captain Alexander formally requested assignment to the Academy as an instructor. This request was granted, and, in 1935, he was assigned to the Academy as an instructor in chemistry and physics. Captain Alexander remained as an instructor at the Academy for five years. During this period, he also served as Head of the Chemistry Department. In addition to his tour of duty as an Academy instructor, Captain Alexander served in many other billets requiring scientific and engineering expertise including, inter alia, his tenure as: (1) Chief of Staff, 12th Coast Guard District, from 1961 to 1962; (2) Chief, Civil Engineering Division, from 1954 to 1958; and (3) Chief, Testing and Development Division, from 1947 to 1952. He also maintained memberships in the American Society of Civil Engineers, the Society of Naval Engineers, and the American Society of Military Engineers.

Captain Alexander distinguished himself as a Coast Guard officer, receiving numerous commendations and awards, including, inter alia: (1) the Bronze Star Medal, awarded in the name of the President of the United States, for "distinguishing himself by meritorious conduct as a Commanding Officer of a U.S. Navy vessel during operations against enemy-held islands in the Southwest Pacific Area ...;" (2) the American Defense Service Medal; (3) the American Campaign Medal; (4) the Asiatic-Pacific Campaign Medal; (5) the European-African-Middle Eastern Campaign Medal; (6) the World War II Victory Medal; and (7) the National Defense Service Medal. In 1962, a disability forced Captain Alexander to retire from the Coast Guard. But following his retirement, and up until the time of his death in April 1988, Captain Alexander maintained a close attachment to the Coast Guard, faithfully attending Coast Guard functions on virtually a monthly basis. Although the exact number of Coast Guard functions attended by Captain Alexander is unknown, his close friend and fellow Coast Guard officer, Admiral Cowart, estimated that they attended approximately 6-8 functions each year together.²

Although Captain Alexander enjoyed a distinguished career in the Coast Guard, he was not selected for flag rank. The heirs rely chiefly on this event in their attempt to paint a picture of Captain Alexander as a man embittered against the Coast Guard for failure to acknowledge his merit. The attempt fails; the testimony paints a different picture. No doubt, Captain Alexander was profoundly disappointed when he was not selected for flag rank. Yet, Admiral Cowart testified convincingly that Captain Alexander shared with him a sincere life-long affection for the Coast Guard. According to the Admiral, Captain Alexander never complained about the Coast Guard; he loved it. Mrs. Mahoney, Captain Alexander's personal secretary and assistant in his final years,³ noted that all the Captain talked about was his years as a Coast Guard officer. She never heard him say anything negative about the Coast Guard or the Academy. Nor did she ever hear him express any bitterness over the Coast Guard's decision not to promote him to the rank of Admiral. Significantly, she noted that everyone addressed him as "Captain," hardly a title he would have retained had he been irreconcilably bitter.

This general theme was echoed by Mr. Cerio, the Captain's personal lawyer for twenty years, his neighbor for thirty and the executor of his estate.⁴ Significantly, Mr. Cerio testified that the Captain spoke highly of the Academy, noting that he felt privileged to have been a cadet there. Similarly, Mr. Cerio reported that Captain Alexander also spoke affectionately and often of the Coast Guard. As Mr. Cerio put it, "that's where his heart was."

At the time of his death in April 1988, Captain Alexander was a widower with no children. He was survived by no relatives of closer kinship than nieces and nephews or perhaps more accurately, half nieces and nephews. Specifically, Captain Alexander was survived by the following potential heirs-at-law:

1. Donald David Alexander, a Michigan resident, who is one of two surviving nephews of Captain Alexander. Donald Alexander's father was Captain Alexander's half-brother.

2. Nelson Earl Alexander, an Ohio resident, who is the other surviving nephew of Captain Alexander. Nelson Alexander is Donald Alexander's brother and, like him, his father was Captain Alexander's half-brother.

3. Julia Ann Farkas, an Ohio resident, who is one of the two surviving nieces of Captain Alexander. Farkas is the sister of Donald and Nelson Alexander.

4. Mary Louise Alexander Brumbaugh, an Ohio resident, who is the other surviving niece of Captain Alexander. She is the sister of Donald and Nelson Alexander and Julia Ann Farkas.

5. Robert Jeffery Alexander, an Ohio resident, who is a grand-nephew of Captain Alexander.

6. Carissa Greenhill, a California resident, who is great-grand-niece of Captain Alexander.

7. Carol Wandersee, an Arizona resident, who is a grand niece of Captain Alexander.

8. Judy Gail Peterson, address unknown, who is a grand niece of Captain Alexander.⁵

With the exception of Donald D. Alexander, none of these heirs had any contact with Captain Alexander during the five years immediately preceding his death. In fact, Captain Alexander does not appear to have been particularly close to any surviving family members. Although it was established at trial that Donald Alexander had infrequent contacts with Captain Alexander, their relationship appears to have been far from intimate. It does appear that Captain Alexander, in his later years, may have sought to renew some family ties, but little seems to have come of...