Rice v. Stanley

327 N.E.2d 774, 42 Ohio St. 2d 209, 71 Ohio Op. 2d 205, 1975 Ohio LEXIS 482
CourtOhio Supreme Court
DecidedMay 7, 1975
DocketNo. 73-1011
StatusPublished
Cited by6 cases

This text of 327 N.E.2d 774 (Rice v. Stanley) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rice v. Stanley, 327 N.E.2d 774, 42 Ohio St. 2d 209, 71 Ohio Op. 2d 205, 1975 Ohio LEXIS 482 (Ohio 1975).

Opinions

O’Neill, O. J.

Under Item VIII of his will, Howard Conover provided for the final disposition of the trust property. He first provided that at the death of his wife, if there be in existence at that time a hospital, the trustee should pay to the company owning and operating the hospital, income and money from the principal for the purpose of enlarging the building or increasing the equipment of the hospital, or for the purpose of purchasing or acquiring additional land or buildings therefor.

It is undisputed that there was no such hospital in existence at the time of the death of his wife, Marie. The language of the above portion of his will is, therefore, not controlling in the issue presented to this court, as his will provided for the disposition of the trust property in the event that no such hospital existed at the time of his wife’s death.

He provided further in Item VIII, that if at the time of the death of his wife there was no such hospital, the trustee should hold the trust fund until such a hospital corporation shall be organized, and that the trustee shall pay over to such hospital corporation the sum of $75,000, either in one cash payment or in installments as he may deem best for the purpose of erecting and equipping such a hospital and the buildings therefor. He then proceeded to provide that thereafter the trustee shall pay 90 percent of the net income on the trust fund “for the use and benefit of such hospital. ’ ’ He also provided that at the expiration of 15 years after the death of his wife, or at the end of five years after the organization of such hospital corporation, whichever shall be the later date, the trustee shall pay to such hospital corporation all of the principal of said trust fund for the purpose of operating and improving the hospital.

The specific issue to be decided by this court is whether a bequest, the sole expressed purpose of which is charitable in nature, to a charitable corporation to be organized after the death of the testator, is valid under the common-law rule against perpetuities, as codified in 1932, as G-. C. 10512-8 (now R. C. 2131.08), even though such corporation [215]*215may not be organized within the period of time required by the rule against perpetuities.

The law on this question is settled. Under the rules expressed by the authors who have written in this field, and the decided cases, the law appears to be clear and, after research, no dissenting or minority view has been discovered.

The applicable rule of law appears in 2 Restatement of the Law, Trusts 2d, 314, Section 401;j:

“If property is given in trust to be applied to a charitable purpose upon the happening of an event which may not occur within the period of the rule against perpetuities, and there is no intermediate gift, the trust fails if, but only if, the happening of the event is a condition precedent.

“If the settlor manifests an intention that the charitable trust shall not arise until the happening of the event, and the event may not happen within the period of the rule against perpetuities, the trust fails. Thus, if a testator bequeaths property in trust to apply it to the erection of a memorial window in a cathedral at a certain place if such cathedral should ever be built, and if the settlor did not manifest a general charitable intention (see Section 399), the trust fails.

“On the other hand, if the settlor manifests an intention that the charitable trust shall arise immediately, the trust is valid, even though he directs that the property shall not be used for the charitable purpose until the happening of an event which may not occur within the period of the rule against perpetuities. In such a case the happening of the event is not a condition precedent, but there is an immediate gift to charity with performance delayed. The court may permit the property to be held by the trustees to await the happening of the event, but if in the opinion of the court the event is not likely to happen until the lapse of an unreasonably long time, the court may direct the immediate application of the property to a purpose falling loithin the general charitable intention of the settlor, thus applying the doctrine, of cy pres, See Section 399,

[216]*216“Thus, if a testator bequeaths money * * * in trust for a charitable corporation to be organised after his death for the purpose of accomplishing certain charitable purposes, the gift is valid although it is possible that the corporation might not be organised within the period of the rule against perpetuities. In such a case there is an immediate gift for charitable purposes, and the court will direct that the property be conveyed to the corporation if it is organised within a reasonable time, or will frame a scheme for the application of the property to the designated charitable purposes and direct that it be administered by trustees appointed by the court, under the doctrine of cy pres. See Section 399. In such a case the organisation of the corporation is not a condition precedent to the existence of the trust, nor is it ordinarily such an essential part of the testator’s intention as to preclude the application of the cy pres doctrine.” (Emphasis added.)

This statement of the rule in 2 Restatement of the Law, Trusts 2d, fits the instant case like the proverbial glove fits the hand. It is exactly in point. It is correct that the testator, in the instant case, sets out certain restrictions or conditions which he desired be placed upon the instrumentality through which the income and the principal of the trust was to be applied to the charitable purposes of the bequest. He carefully separated the statement of the desired restrictions or conditions upon the instrumentality from the statement of the purposes of the bequest. The trust authorities, as well as the cases, not only assert that a charitable corporation, which may not be organized within a period of time required by the rule against perpetuities, is not a condition precedent which will invalidate the trust under the rule, but they also assert that conditions put on the mode of application of the trust are not conditions precedent which will invalidate the trust under the rule against perpetuities.

4 Scott, The Law of Trusts (3 Ed.), 3163, Section 401.8, makes this point:

“ * * * Even if the corporation may not be organized within that period, the bequest is nevertheless valid if the [217]*217testator had a general intention to devote the property to the specified charitable purposes. In such a case there is an immediate gift to charity subject to no condition precedent; and although the particular mode of application is subject to such a condition, that does not invalidate the gift.” (Emphasis added.) See cases cited by Scott.

Here, the language of the trust instrument is unmistakably clear as to the general intent of the testator to devote the property to the specified charitable purposes. The purposes of the charity were separately set forth and described in the following language:

“ * * * then such trustee shall pay over to such hospital corporation the sum of seventy five thousand dollars either in one cash payment or in installments as he may deem best for the purpose of erecting and equipping such a hospital and the buildings therefor

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Cite This Page — Counsel Stack

Bluebook (online)
327 N.E.2d 774, 42 Ohio St. 2d 209, 71 Ohio Op. 2d 205, 1975 Ohio LEXIS 482, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rice-v-stanley-ohio-1975.