Wachovia Bank & Trust Co. v. John Thomasson Const. Co., 11
Decision Date | 11 July 1969 |
Docket Number | No. 11,11 |
Citation | 168 S.E.2d 358,275 N.C. 399 |
Court | North Carolina Supreme Court |
Parties | WACHOVIA BANK AND TRUST COMPANY, Trustee, and the Alexander Children's Center, a Charitable Corporation v. JOHN THOMASSON CONSTRUCTION CO., Inc., a Corporation. |
James O. Cobb, Charlotte, for defendant appellant.
Helms, Mulliss & Johnston, by E. Osborne Ayscue, Jr., Charlotte, for plaintiff appellees.
This appeal presents two questions for decision: (1) Is the restriction on alienation in the deed creating the charitable trust valid? (2) May the court, in the exercise of its equitable jurisdiction, authorize a sale of the real property in said trust under the facts and circumstances shown by the record? We will consider these questions in their numerical order.
It is well settled in this jurisdiction that the rule against perpetuity does not apply to charitable trusts, and such trusts may continue indefinitely. American Trust Co. v. Williamson, 228 N.C. 458, 46 S.E.2d 104; Penick v. Bank of Wadesboro, 218 N.C. 686, 12 S.E.2d 253; G.S. § 36--21. Nevertheless, whether the restriction in the Garsed deed was void as being a restraint upon alienation presents a more serious question. The general rule in North Carolina as to private trusts is that a restraint on alienation is against public policy and void. Douglass v. Stevens, 214 N.C. 688, 200 S.E. 366; Williams v. Sealy, 201 N.C. 372, 160 S.E. 452; American Trust Co. v. Nicholson, 162 N.C. 257, 78 S.E. 152. However, we find little authority in North Carolina on the question of whether an absolute restraint on alienation in a gift to a charitable trust is void.
The Court of Appeals in holding that the restraint in the Garsed deed was void relied solely on the case of Hass v. Hass, 195 N.C. 734, 143 S.E. 541. In that case the Court, in construing a devise by will, stated:
An analysis of the cases cited in Hass v. Hass, Supra, reveals that the decision in both Springs v. Springs, 182 N.C. 484, 109 S.E. 839, and Carter v. Strickland, 165 N.C. 69, 80 S.E. 961, is based on the proposition that the words used are precatory words, merely expressing the wish of the donor rather than words of absolute restraint on alienation. Further, the case of Latimer v. Waddell, 119 N.C. 370, 26 S.E. 122, referred to a private trust and thus is not applicable to the question here posed. We therefore conclude that the result in the Hass case turned on the fact that the attempted restraint was precatory--a mere wish.
In Brooks v. Duckworth, 234 N.C. 549, 67 S.E.2d 752, the Court seemingly recognizes that charitable trusts are exceptions to the rule that a restraint on alienation is void. There the Court, considering a charitable trust in which the trustees were prohibited from mortgaging or disposing of the trust property, said:
(Emphasis ours.)
Since the holdings of this Court on this question are meager and somewhat nebulous, we turn to other jurisdictions for enlightenment.
The general rule is that a condition against alienation in a gift for a charitable trust is not invalid or void. Alexander v. House, 133 Conn. 725, 54 A.2d 510; Dickenson v. City of Anna, 310 Ill. 222, 141 N.E. 754, 30 A.L.R. 587; Stubblefield v. Peoples Bank of Bloomington, 406 Ill. 374, 94 N.E.2d 127; Catholic Bishop of Chicago v. Murr, 3 Ill.2d 107, 120 N.E.2d 4; Sisters of Mercy of Cedar Rapids v. Lightner, 223 Iowa 1049, 274 N.W. 86; Smart v. Town of Durham, 77 N.H. 56, 86 A. 821; Mills v. Davison, 54 N.J.Eq. 659, 35 A. 1072; Ohio Society for Crippled Children and Adults v. McElroy, 175 Ohio St. 49, 191 N.E.2d 543, 100 A.L.R.2d 1202; Henshaw v. Flenniken, 183 Tenn. 232, 191 S.W.2d 541, 168 A.L.R 1010; City of Philadelphia v. Girard, 45 Pa. 9; 15 Am.Jur.2d, Charities, Sec. 22. See also Anno: 100 A.L.R.2d 1208; Quinn v. Peoples Trust and Savings Co., 223 Ind. 317, 60 N.E.2d 281, 157 A.L.R. 885.
Since North Carolina recognizes that a donor may create a perpetual charitable trust, it would seem strange to deviate from the general rule so as to prevent the donor from restraining sale of the corpus of such trust. Furthermore, it appears that North Carolina has tacitly recognized the right of a donor to restrain alienation of property in charitable trusts when it recognizes the right of the court, in its equitable jurisdiction, to order the sale of trust property under certain conditions, even when the trust forbids the trustee to mortgage or sell.
We conclude that the Court of Appeals erred in holding that the trustee took title in fee simple absolute upon the death of the life tenant without restraint or restriction on the power of alienability. We hold that the trustee took subject to the restrictions on alienation contained in the trust instrument. This, however, does not alter the end result which is controlled by the answer to the second question presented.
The Court of Appeals in considering the second question for decision stated:
Holton v. Elliott, 193 N.C. 708, 138 S.E. 3.'
We agree with this statement.
There is plenary authority in this jurisdiction to the effect that courts in the exercise of their equitable jurisdiction may modify the terms of a charitable trust when it appears that some exigency, contingency, or emergency not anticipated by the trustor has arisen requiring a disregard of a specific provision of the trust in order to preserve the trust estate or protect the Cestuis. In order to accomplish the ultimate purpose or intent of the trustor, the court may order real property sold and reinvested in other property when a change in circumstances makes such sale necessary to accomplish the purposes of the trust, even though the trust forbids the trustees to mortgage or sell the property. Wachovia Bank & Trust Co. v. Johnston, 269 N.C. 701, 153 S.E.2d 449; Cocke v. Duke University, 260 N.C. 1, 131 S.E.2d 909; Keesler v. North Carolina National Bank, 256 N.C. 12, 122 S.E.2d 807; Trustees of Rex Hospital v. Board of Comrs. of Wake County, 239 N.C. 312, 79 S.E.2d 892; Brooks v. Duckworth, Supra; Trustees of Watts Hospital v. Board of Comrs. of Durham, 231 N.C. 604, 58 S.E.2d 696; Moses H. Cone Memorial Hospital v. Cone, 231 N.C. 292, 56 S.E.2d 709; Johnson...
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