First National Bank & Trust Co. v. First National Bank & Trust Co.

121 A.2d 296, 35 Del. Ch. 449, 1956 Del. Ch. LEXIS 90
CourtCourt of Chancery of Delaware
DecidedMarch 20, 1956
StatusPublished
Cited by6 cases

This text of 121 A.2d 296 (First National Bank & Trust Co. v. First National Bank & Trust Co.) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First National Bank & Trust Co. v. First National Bank & Trust Co., 121 A.2d 296, 35 Del. Ch. 449, 1956 Del. Ch. LEXIS 90 (Del. Ct. App. 1956).

Opinion

Seitz, Chancellor:

Plaintiffs seek instructions as to whether a portion of the corpus of one testamentary trust (“Needy Poor”) can be transferred under the cy pres doctrine to assist in effectuating the testator’s intention with respect to another trust (“Library”).

Plaintiffs are co-trustees under the will of Daniel Hirsch, deceased. They are also named as defendants in their capacities as co-trustees under the testamentary trusts involved in this litigation.1 Because public charities were involved, the Attorney General was made a party defendant. His office took no active part in the case.

Basically we are dealing with the application of the cy pres doctrine. In support of his contention that as a matter of law, regardless of the factual proof, the alleged excess corpus in the Needy Poor Trust cannot under the cy pres doctrine be transferred to the Library Trust, the attorney for the Needy Poor Trust has moved for judgment on the pleadings. This is the decision thereon. ■

By making his motion for judgment the attorney for the Needy Poor Trust necessarily accepts, for present purposes, the truth of the material factual allegations. Let us see what they show. Daniel Hirsch of Milford, Delaware died September 14, 1940, leaving a last will dated September 10, 1935. By his probated will he first provided for a number of general and specific legacies, devises and bequests. Under Item 13 the residue of his estate was left in trust, the income to be paid to his widow and brother and to the survivor of them. Upon the death of the survivor the trust corpus was to be divided into five separate trust funds for different charitable purposes. The first three such trusts were substantially as follows:

1. $25,000 for “The Daniel Hirsch Endowment Fund”. The income was to be paid to the Milford Hospital to be used for the care of indigent persons residing within a five mile radius of the hospital.

2. $25,000 for “The Mary E. Hirsch Endowment Fund”. The income was to be paid to the Presbyterian Church of Milford for maintenance, etc.

[452]*4523. $10,000 for “The Daniel Hirsch Scholarship Fund”. The income was to be used for college scholarships for two students of the Milford High School.

After providing for the three trusts mentioned, the testator created the so-called Library and Needy Poor Trusts. The language creating such trusts follows:

“The Further sum of Twenty-five Thousand Dollars ($25,000.00) thereof to be set aside as a Free Public Library Fund. Fifteen Thousand Dollars ($15,000.00) of said fund is to be used for the purpose of the purchase of a suitable site for free public library building in the City of Milford aforesaid, and the erection thereon of a library building to be known as “The Blanch C. Hirsch Free Public Library”. The Trustees herein-before named shall have full power and authority to select such site and to erect a library building thereon, but it is my wish that I. Dolphus Short, one of said Trustees, shall have the controlling voice both in the selection of the site and the erection of the building. And it is my suggestion and wish that the said building shall be of domestic brick, and that the plans for such building shall be prepared by a competent architect.
“(e) The remaining Ten Thousand Dollars ($10,000.00) of said fund I direct to be invested by my said Trustees and kept invested in such securities not necessarily legal, as shall in the judgment and discretion of my Trustees, appear good, safe and profitable, and the income therefrom to be used for the general upkeep and maintenance of said library, but not for the purchase of books nor for salary of librarians. Should not the necessary and proper steps be taken for the erection of the above named public library building within one year from the date of the death of the survivor of my said wife and brother, the said provisions for such library building and its upkeep and maintenance shall become null and void and the sums so set apart and provided for that purpose shall become a part of my residuary estate and treated as such.
“Item 14. After the payment of the several legacies and the setting up of the various trusts herein provided for, the rest and [453]*453residue of my estate of whatever it may consist shall be turned over to the said Trustees provided for in the second paragraph of Item 13 to be by them invested, reinvested and kept invested in such securities, not necessarily legal, as shall in their judgment appear good, safe and profitable and the net income therefrom paid over semi-annually to the societies or organizations that look after and administer to the needy poor of the City of Milford, and said Trustees shall have entire control in the selection of the societies or organizations to which such income is to be paid.”

The estate was settled on January 1, 1942 at which time the trustees received assets valued at $117,275.69. At the death of the surviving life beneficiary on February 18, 1954, the market value of the assets to be distributed to the five trusts had increased to the total of $197,385.26. The Needy Poor Trust received $112,385.26.

It is alleged that because of the changed economic conditions which occurred following the death of the testator the library trustees now find it impossible to carry out the general intention of the testator to acquire a site, erect a library building and maintain it for $25,000. They allege that these things can be done for $75,000.

The cross complaint of the Library Trustees specifically alleges that “the corpus of the trust for the Needy Poor of the City of Milford, under the present circumstances, is excessive for the charitable purpose for which it was intended”. This is allegedly so because of an increase in public relief since the testator’s death. These allegations are denied by the Needy Poor Trustees. I have assumed the alleged excess for the purpose of disposing of the contention of the Needy Poor Trustees that if there is an excess it nevertheless cannot go to the Library Trust. However, it will be noted that the second ground of my decision requires a different treatment of this allegation.

Milford is without a public library building, the present library being housed in two rooms on the second floor by the Community Building. It is administered by library commissioners appointed by the resident judge and financed by a small state appropriation and a real estate tax levied within the Milford School District.

[454]*454On these alleged facts and on the present motion for judgment on the pleadings by the trustees of the Needy Poor Trust, the question first presented is whether the alleged excess of corpus in the Needy Poor Trust could under any rule of law be transferred to the Library Trust. I pose the issue in this manner because I assume no ruling on cy pres is sought except’ in connection with the diversion of the funds to the Library Trust.

Assuming, as alleged, that the Needy Poor Trust has more than sufficient assets to effectuate the purposes of that trust, may any portion of the excess be transferred to the library trust under the doctrine of equitable cy pres? The attorney for the Needy Poor Trust says that it cannot because any excess under the cy pres

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Bluebook (online)
121 A.2d 296, 35 Del. Ch. 449, 1956 Del. Ch. LEXIS 90, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-national-bank-trust-co-v-first-national-bank-trust-co-delch-1956.