Peck v. Eastern Star Homes

112 P.2d 605, 17 Cal. 2d 853, 1941 Cal. LEXIS 324

• Court: California Supreme Court
• Decided: April 28, 1941
• Docket: L. A. No. 17365
• Status: Published

Opinions

TRAYNOR, J.

On September 23, 1937, Ella M. Henderson died leaving a will executed on June 11, 1937, which provided for a specific legacy of $500 to Bessie M. Peck and bequeathed the residue of the estate to the Eastern Star Homes of California “to be used by the trustees in such manner as may be most beneficial to the Home and its inmates”. The will was admitted to probate and Bessie Peck was appointed executrix of the estate which consists of personal property appraised at $16,229.04. At the request of Leon MeGary, a nephew and one of the heirs-at-law of deceased, the executrix instituted this proceeding to determine which persons were entitled to share in the distribution of the estate. The trial court held that the Eastern Star Plomes was a non-profit charitable organization under sections 41 and 43 of the Probate Code. These sections provide that a devise or bequest to a charitable corporation or to a person in trust for charitable uses under a will executed less than six months prior to the death of the testator cannot exceed one-third of the entire estate if there are surviving heirs who would otherwise take the excess over one-third. The court concluded that Bessie Peck should receive the sum of $500; the Eastern Star Homes should receive only one-third of the residue of the estate; and the nephews, nieces, and other relatives of the deceased should receive the other two-thirds of the residue. Judgment was entered accordingly. The Eastern Star Homes has appealed.

The respondent executrix has taken the position that she is a neutral party and not called upon to contest the appeal of the Eastern Star Homes. She consequently has filed no brief nor made any appearance in opposition to the appeal. Certain of the heirs of the deceased, however, to whom distribution of a portion of the residue of the estate has been ordered, have been granted leave to appear and have filed a brief in opposition to that of appellant.

The Order of the Eastern Star in the State of California is an unincorporated fraternal organization consisting of approximately 96,000 members affiliated in 492 subordinate chapters located within the state. Membership in the Order is limited to those persons elected by the Order from among Master Masons, their wives, and certain other female relatives. In addition to an initiation fee, each member pays annual dues and assessments levied by the Grand Chapter, the governing body of the Order in this state, and by the local chapter with which the member is affiliated. In 1930 the Grand Chapter organized the Eastern Star Homes of California, a non-profit corporation and appellant herein, for the following purpose: “To own, control, conduct and manage homes for the care, maintenance and support of aged, indigent or infirm members of the Order of the Eastern Star”. Appellant maintains such a home in Los Angeles. The laws of the Grand Chapter and the by-laws of the corporation provide that admission to the Home shall be restricted to members of the Order selected by appellant’s board of trustees who: (1) have been nominated by their local chapter; (2) have been members in good standing of the Order of the Eastern Star in the State of California for not less than 10 years; (3) are 65 years of age; and (4) are in reasonably good health. Upon admission to the Home each member is required to assign all of his assets to the appellant.

The average yearly cost of operating the Home is $30,000, 80 per cent of which is derived from annual assessments levied by the Grand Chapter upon members of the Order and the remaining 20 per cent principally from income on investments. Appellant’s only other income is $500 a year from its endowment fund.

If the bequest in question constitutes a gift to a charitable institution or a gift in trust for charitable uses, it is invalid to the extent that it exceeds the one-third limitation imposed by section 41 of the Probate Code, the will having been executed within six months prior to the death of the testatrix. The present bequest sets up a trust for the benefit of the inmates of the Home. It is made to the Eastern Star Homes, Inc., “to be used by the trustees in such manner as may be most beneficial to the Home and its inmates”. Thus, the trustees, the beneficiaries, and the trust purpose are all stated. Such bequests, even though made directly to an association, are generally construed to constitute trusts for the benefit of the inmates if the bequests are charitable in nature. (Estate of McDole, 215 Cal. 328 [10 Pac. (2d) 75]; Estate of De Mars, 20 Cal. App. (2d) 514 [67 Pac. (2d) 374]; Estate of McCray, 204 Cal. 399 [268 Pac. 647]; Estate of Upham, 127 Cal. 90 [59 Pac. 315]; Rest., Trusts, sec. 397 (f).)

A bequest is charitable if: (1) It is made for a charitable purpose; its aims and accomplishments are of religious, educational, political or general social interest to mankind. (People v. Cogswell, 113 Cal. 129 [45 Pac. 270, 35 L. R. A. 269]; Estate of Merchant, 143 Cal. 537 [77 Pac. 475].) (2) The ultimate recipients constitute either the community as a whole or an unascertainable and indefinite portion thereof. (People v. Cogswell, supra; Estate of Hinckley, 58 Cal. 457; Fay v. Howe, 136 Cal. 599 [69 Pac. 423].) The charitable nature of an institution is determined on the same basis.

The bequest in the present case was clearly made for a charitable purpose: Since the enactment of the Statute of Charitable Uses during the reign of Elizabeth, aid to the aged and infirm has been recognized as charitable. (See cases cited in 5 Cal. Jur. 24.) Relief of poverty is not a condition of charitable assistance. If the benefit conferred has a sufficiently widespread social value, a charitable purpose exists. (Rest., Trusts, secs. 368, 374; People v. Cogswell, supra; Collier v. Lindley, 203 Cal. 641 [266 Pac. 526]; 16 Cal. Law Rev. 478.) Thus, gifts or trusts for educational institutions (Rest., Trusts, sec. 370; People v. Cogswell, supra), the promotion of woman’s suffrage (Garrison v. Little, 75 Ill. App. 402), the publishing of religious writings (Rest., Trusts, sec. 371; Estate of Graham, 63 Cal. App. 41 [218 Pac. 84]; see 16 Cal. Law Rev. 478 at 482), and even for the relief of dumb animals (Estate of Coleman, 167 Cal. 212 [138 Pac. 992, Ann. Cas. 1915C, 682]; Rest., Trusts, sec. 374 (c) ), have been held charitable. It is a matter of common knowledge that aged people require care and attention apart from financial assistance, and the supply of this care and attention is as much a charitable and benevolent purpose as the relief of their financial wants. Every civilized community must provide facilities, either public or private, for the care of old people regardless of financial condition, and a bequest to such an institution to further its purposes is of enough social value to be designated as charitable. (See Estate of Friedman, 171 Cal. 431 [153 Pac. 918]; Estate of Peabody, 154 Cal. 173 [97 Pac. 184]; Rest., Trusts, secs. 368-374.) The articles of incorporation of appellant Home indicate that it was created for the purpose of rendering assistance to the deserving aged. A bequest to it may therefore be charitable even though indigence is not a requirement for admission.

Appellant points out that upon admission an inmate must assign his assets to the Home. The value of such an assignment is not necessarily commensurate with the benefits derived by him from the Home. But even if each inmate were required to pay in full for his care, a bequest to the institution may still be charitable. A gift or trust to support an institution beneficial to the community is charitable even though the inmates must pay fees or contribute to the expense of maintaining the institution so long as the income thus derived is used only to maintain the institution or for some other charitable purpose. (Rest., Trusts, sec. 376 (c); Dingwell v. Seymour, 91 Cal. App. 483 [267 Pac. 327]; Estate of Peabody, 154 Cal. 173 [97 Pac. 184].) Thus students at a private school may be required to pay tuition fees to cover the cost of their instruction; yet a gift to such a school for the purpose of assisting in the education of its students is clearly charitable. (Estate of Bailey, 19 Cal. App. (2d) 135 [65 Pac. (2d) 102]; People v. Cogswell, supra; Estate of Bartlett, 122 Cal. App. 375 [10 Pac. (2d) 126]; Rest., Trusts, sec. 370.) Appellant cites a number of decisions denying a charitable status to fraternal orders, lodges, and kindred organizations. (Bangor v. Rising Virtue etc. Masonic Lodge, 73 Me. 428 [40 Am. Rep. 369]; Mason v. Perry, 22 R. I. 475 [48 Atl. 671]; Babb v. Reed, 5 Rawle (Pa.), 151 [28 Am. Dec. 650].) These eases have no bearing on the present one. The gift here is not to the Order of the Eastern Star but to the Eastern Star Homes, Inc., a corporation devoted exclusively to caring for the aged, and it is not a general fraternal contribution but was made expressly for the charitable purpose of aiding the aged.

The support of the Home by annual assessments on members of the Order of the Eastern Star likewise does not destroy the charitable nature of the bequest. Appellant cites Estate of Dol, 182 Cal. 159 [187 Pac. 428], Brown v. La Societe Francaise, etc., 138 Cal. 475 [71 Pac. 516], and Gorman v. Russell, 14 Cal. 531, for the proposition that a mutual benefit society, each member of which pays fixed periodic sums into a common fund which is used to render medical or other assistance to any member in need thereof, does not constitute a charitable organization. Appellant contends that it is just such a non-charitable mutual benefit society organized for the protection of-the members of the Order of the Eastern Star and that a bequest to it is therefore not charitable. Appellant, however, overlooks the fact that the nature of the bequest is not necessarily determined by the status of the organization to which it is made. A charitable gift may be made to a non-charitable institution so long as the purpose of the gift remains charitable. (Estate of Willey, 128 Cal. 1 [60 Pac. 471]; Powers v. Home for Aged Women, 58 R. I. 323 [192 Atl. 770, 110 A. L. R. 1361].) The cases of Gorman v. Russell and Brown v. La Societe Francaise, etc., were concerned solely with the charitable or non-charitable status of certain organizations and not with the question of whether a gift to such organizations by an outsider might be a charitable one. In the Gorman ease a group of longshoremen formed a society, each member of which contributed to a common fund which was used to assist members who became sick or disabled. Certain individuals who were expelled from the organization brought suit for dissolution and distribution of the funds, claiming the organization was no more than a private partnership. The defendants contended the society was a charitable one and that therefore the funds belonged not to the individual members but to the ultimate beneficiaries. The court held the organization to be non-charitable. In the Brown case a patient who was negligently treated in a hospital maintained by a mutual benefit society for the assistance of its members brought suit against the hospital. The hospital contended that it was a charitable institution and therefore not liable under the rule of respondeat superior for the negligent acts of its servants. The court held it to be non-charitable. In Estate of Dol the question was squarely presented whether a bequest to a mutual benefit society organized to render medical aid to its members was charitable. The court, however, held on the basis of the Brown and Gorman cases that the bequest was not charitable because the organization itself was not a charitable one. It failed to consider in any way whether the gift was charitable in nature despite the status of the organization, overlooking the fact that the Brown and Gorman cases on which it relied were not at all concerned with the charitable nature of gifts.

If a group of individuals agree to contribute equal amounts into a fund to be used for the benefit of all, such a group may well be said to be non-eharitable in nature because each individual is providing only for his own welfare and does not intend to make a free contribution toward the assistance of others. If an outsider, however, receiving no benefits from the organization, makes a gift to it, that gift may well be a charitable one if the members of the organization are sufficiently numerous and it is organized for a purpose beneficial to society such as providing for medical assistance to its members. Such a donor has the charitable- purpose of assisting those members of a large group who become sick, without any benefit to himself, and the gift thus may be a charitable one.

In the present case, therefore, even if the Home itself be considered in the nature of a mutual benefit society and hence non-charitable, the bequest to the Home, being for the purpose of aiding the aged, may remain charitable.

A true mutual benefit association, however, is based upon reciprocal contracts and requires that a member receive benefits as a matter of right. Members of the Order of the Eastern Star who pay their required assessments acquire no right, contractual or otherwise, to be admitted to the Home, even after fulfilling the entrance requirements. A member must be nominated by his local chapter and selected by the trustees of the Home before he can gain admittance, and only one member out of every 500 in a local chapter can acquire residence in the Home at the same time. A member is admitted to the Home because his case is deserving and not because his previous contributions have given him a contractual right to admission. Thus, there is a clear distinction between this type of organization which has a charitable purpose and a mutual benefit society. Many decisions sustain the charitable nature of institutions established to render aid to the members thereof who need assistance even though the institutions are supported by contributions from the members. (Spiller v. Maude, 32 Ch. D. 158 (1881); Pease v. Pattison, 32 Ch. D. 154 (1886); In re Buck, 2 Ch. 727 (1896); In re Lacy, 2 Ch. 149 (1899); Morrow v. Smith (Re Wilson), 145 Iowa 514 [124 N. W. 316, Ann. Cas. 1912A, 1183, 26 L. R. A. (N. S.) 696]; Plattsmouth Lodge, etc., v. Cass County, 79 Neb. 463 [113 N. W. 167]; De la Pole v. Broughton, 118 Wash. 395 [204 Pac. 15]; Bogert, Trusts and Trustees, vol. 2, pp. 1122-1126; Rest., Trusts, sec. 369.) The bequest to appellant was therefore made for a charitable purpose and to an institution with a charitable purpose.

There remains the question whether the aged members of the Order for whose welfare the Home was established constitute a class of beneficiaries indefinite enough to render the bequest or the institution to which it was made charitable. It is not essential that every member of the community be a direct beneficiary of a charitable gift. A charity may be validly restricted to an indefinite class within the community so long as the class is large enough to make the enforcement of the gift beneficial to the community. (Rest., Trusts, sec. 375.) In the ease of bequests for the relief of poverty, or the advancement of education, or religion, or the promotion of health, inclusive of the care of the aged, the number of beneficiaries need not be so large as when the gift is simply for the general benefit of a class without indication of the particular purpose for which it is to be used. (Rest., Trusts, sec. 375 (a).) Thus gifts and trusts to eleemosynary institutions whose benefits are restricted to members in a particular organization have been held charitable. (Estate of Halm, 196 Cal. 778 [239 Pac. 307]; Estate of Bailey, 19 Cal. App. (2d) 135 [65 Pac. (2d) 102]; Spiller v. Maude, 32 Ch. D. 158 (1881); Pease v. Pattinson, 32 Ch. D. 154 (1886); In re Buck, 2 Ch. 727 (1896); In re Lacy, 2 Ch. 149 (1899); City of Indianapolis v. Grand Master, 25 Ind. 518; Duke v. Fuller, 9 N. H. 536 [32 Am. Dec. 392]; Morrow v. Smith (Re Wilson), supra; Most Worshipful Grand Lodge v. Board of Review, 281 Ill. 480 [117 N. E. 1016]; Roberts v. Corson, 79 N. H. 215 [107 Atl. 625]; State v. Toney, 141 Or. 406 [17 Pac. (2d) 1105]; Masonic Education and Charity Trust v. City of Boston, 201 Mass. 320 [87 N. E. 602]; City of Petersburg v. Petersburg Benevolent Mechanics’ Assn., 78 Va. 431; De la Pole v. Broughton, supra; Scott on Trusts, vol. 2, pp. 2022-2028; Bogert, Trusts and Trustees, vol. 2, pp. 1106, 1107; Rest., Trusts, 369.) Gifts and trusts designed to aid the poor, the aged, and the unfortunate have been sustained as charitable although the beneficiaries are limited to the widows and orphans of the deceased members of particular organizations, including fraternal orders. (Estate of Willey, 128 Cal. 1 [60 Pac. 471]; Estate of Upham, 127 Cal. 90 [59 Pac. 315]; Guilfoil v. Arthur, 158 Ill. 600 [41 N. E. 1009]; Widows and Orphans Home, etc., v. Commonwealth, 126 Ky. 386 [103 S. W. 354, 16 L. R. A. (N. S.) 829]; Duke v. Fuller, 9 N. H. 536 [32 Am. Dec. 392]; Heiskell v. Chickasaw Lodge, 87 Tenn. 668 [11 S. W. 825, 4 L. R. A. 699]; City of Petersburg v. Petersburg Benevolent Mechanics’ Assn., 78 Va. 431; De la Pole v. Broughton, 118 Wash. 395 [204 Pac. 15].)

Appellant points out that admission to the Home is restricted to members of the Eastern Star who have been affiliated with the California Order for 10 years and have reached the age of 65 years and contends therefore that the number of beneficiaries is definitely fixed since their identity can be ascertained by an examination of the Order rolls. This argument assumes that the Home exists solely for the benefit of members who are at present able to fulfill the requirements for admission. The Order of the Eastern Star, however, is a constantly changing group. The Home exists not only for the benefit of members now eligible for admission but also for the benefit of members who at present lack the entrance qualifications and persons who will join the Order in the future. An inspection of the records therefore will not disclose all of the class to be benefited. In addition, appellant’s articles of incorporation limit each local chapter to one resident in the Home for each 500 members in the Chapter. This restriction operates to exclude from the Home many members possessing the required qualifications for admission and renders the beneficiaries even more indefinite.

Section 41 of the Probate Code restricts the amount of a charitable bequest to one-third of the testator's estate. The trial court in the present case restricted the amount of the bequest to appellant to one-third of the residue of the testator’s estate. The judgment is reversed and .the cause is remanded to the trial court with instructions to modify its decree by awarding to appellant an amount equal to one-third of the testator’s estate, neither party to recover costs on appeal.

Shenk, J., Edmonds, J., and Gibson, C. J., concurred.