St. Joseph's Hospital & Medical Center v. Hansgen

848 P.2d 313, 174 Ariz. 228, 122 Ariz. Adv. Rep. 58, 1992 Ariz. App. LEXIS 267
CourtCourt of Appeals of Arizona
DecidedSeptember 24, 1992
DocketNo. 1 CA-CV 90-300
StatusPublished
Cited by2 cases

This text of 848 P.2d 313 (St. Joseph's Hospital & Medical Center v. Hansgen) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
St. Joseph's Hospital & Medical Center v. Hansgen, 848 P.2d 313, 174 Ariz. 228, 122 Ariz. Adv. Rep. 58, 1992 Ariz. App. LEXIS 267 (Ark. Ct. App. 1992).

Opinion

[231]*231OPINION

VOSS, Judge.

In this appeal we must construe a testamentary trust written in 1930. Since the time of the testator’s death circumstances have changed substantially so that the terms of the charitable trust are outmoded. The heirs of the testator ask us to hold that the trust has failed and the estate should be distributed to them. The beneficiary of the trust requests that we deviate from the terms of the trust by application of the doctrines of cy pres or equitable deviation.

FACTS AND PROCEDURAL HISTORY

Dr. Robert Wallace Craig was a physician who came to Arizona in 1898 suffering from tuberculosis. He conquered his tuberculosis and went on to become a prominent physician, businessman, and property owner in Phoenix. Dr. Craig died in 1933, leaving a will dated May 12, 1930. He was survived by his wife and daughter.

In his will, Dr. Craig established a trust for the benefit of his wife and daughter, to provide them income for life. Dr. Craig’s wife died in 1976 and his daughter died in 1987. Dr. Craig also provided for disposition of the trust estate following the death of his wife and daughter. Dr. Craig set out his intentions in “Article Fifth” of his will:

FIFTH: Upon the death of the surviv- or of my said wife and my said daughter, there shall be turned over and delivered from the trust estate to Sisters of Mercy of Arizona, a corporation, conducting St. Joseph’s Hospital in Phoenix, Arizona, the sum of One Hundred Fifty Thousand Dollars ($150,000.00) to be used by said corporation for the erection, as soon as practicable, of a building to be situated in or near the City of Phoenix, Arizona, which said building shall be used by the said Sisters of Mercy of Arizona for the exclusive care of tubercular cases, and I direct that any tubercular patient is to be admitted and cared for in said building, irrespective of his or her religious belief or church affiliation.

The one of my Trustees who shall be acting at the time of the death of the survivor of my said wife and daughter, that is to say, Gus H. Hirschfeld, Sylvan C. Ganz or Phoenix Savings Bank and Trust Company, as the case may be, shall continue as sole Trustee to hold and manage the entire trust estate, including any and all accumulations and undistributed income, excepting, of course, the One Hundred Fifty Thousand Dollars ($150,-000.00) to be paid to Sisters of Mercy of Arizona as aforesaid (excepting also the Five Thousand Dollars ($5,000.00) which might, under foregoing provisions, at that time be paid to Sarah J. Henderson), for a period of twenty-one (21) years from and after the death of the survivor of my said wife and daughter, and the net income therefrom shall be paid over and delivered by my said Trustee for and during said period of twenty-one (21) years and in quarterly installments, so nearly as that may be practicable, to said Sisters of Mercy of Arizona, to be used by said corporation to reduce the cost to individual patients who may be treated or cared for in the building to be erected by said Sisters of Mercy of Arizona as above provided.

I direct that there be filed in the Probate Court having jurisdiction of said trust, an agreement duly executed by said Sisters of Mercy of Arizona, wherein and whereby said corporation will agree to receive the net income from said trust estate for and during the period of twenty-one (21) years or such shorter period as may be limited by law, for the uses and purposes hereinabove provided, and if the said Sisters of Mercy of Arizona shall refuse or fail to execute and file such agreement within a reasonable time, then the entire estate shall immediately go and be paid over to my heirs-at-law then living, pursuant to the rules of succession of the State of Arizona then in force and effect.

Upon the expiration of twenty-one (21) years from and after the death of the survivor of my wife, Jo E. Craig, and my daughter, Kathleen Craig Bloomhardt, or upon the sooner termination of the trust, [232]*232if a termination of said trust should be required by law prior to the expiration of twenty-one (21) years, I direct that the entire trust estate shall go to and become the property of the Sisters of Mercy of Arizona, a corporation, absolutely, and subject to no direction by me or any other person. I express the hope, however, that said Sisters of Mercy of Arizona, shall make a use of the trust funds similar to the use to be made by said corporation of the income under the foregoing provisions.

The Sisters of Mercy of Arizona was a nonprofit charitable corporation that operated a charity hospital. It is now known as St. Joseph’s Hospital and Medical Center. It continues as a non-profit charitable organization devoted to the care of the sick and needy.1

In 1944, the hospital filed a document agreeing “to receive the net income from the trust estate provided for under the Will of ROBERT WALLACE CRAIG, Deceased, Paragraph Fifth____” In 1962, the hospital filed a second agreement to accept the trust “during the period of twenty-one (21) years or such shorter period as may be limited by law for the uses and purposes provided in the said Will.” This document also stated: “The execution of this Agreement shall not preclude the undersigned from taking such action as may be necessary to secure a construction of the said Will in order to effectuate the intent and purpose of the testator.”

The advent of public health measures and antibiotics have effectively reduced the incidence of tuberculosis in the general population. Between 1930 and 1986 the incidence of tuberculosis dropped from 130 cases per 100,000 population to 7 cases per 100,000 population. The treatment of tuberculosis has also changed. In Dr. Craig’s day, treatment consisted of admission to a hospital. At the present time treatment is generally accomplished through chemotherapy on an out-patient basis. Hospitalization is generally no longer needed.

St. Joseph’s filed a petition on December 14, 1988, proposing to the court that it depart from the terms of Dr. Craig’s bequest under the cy pres doctrine. It submitted the affidavit of its vice-president for planning/research which asserted:

[I]t is not practical or feasible to construct a hospital facility for the exclusive care of tuberculosis patients for $150,-000.00. Presently, the average capital expenditure to construct and equip one hospital bed in a major urban medical center is $150,000-$180,000. In contrast, renovating existing hospital space costs about $150-$180 per square foot, so $150,000 could renovate approximately 1,000 square feet of existing hospital space.

The hospital further stated that it was “unlikely that the annual cost of providing care to tuberculosis patients at St. Joseph’s Hospital would approach $200,000____” In support of its request to use the bequest for purposes somewhat different from the specific terms of Dr. Craig’s will, the hospital asserted:

There are a number of diseases related to tuberculosis. First, there are a variety of diseases — such as cancer or Acquired Immune Deficiency Syndrome (AIDS) — for which tuberculosis is a secondary illness caused by breakdowns of the immune system of the body. Second, there are a number of lung diseases other than tuberculosis — such as coccidimy-cosis (i.e., “Valley Fever”), chronic obstructive pulmonary disease, severe chronic asthma or emphysema — which can be broadly viewed to be related to tuberculosis.

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Related

Trantor v. Fredrikson
861 P.2d 674 (Court of Appeals of Arizona, 1993)
Matter of Estate of Craig
848 P.2d 313 (Court of Appeals of Arizona, 1992)

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Bluebook (online)
848 P.2d 313, 174 Ariz. 228, 122 Ariz. Adv. Rep. 58, 1992 Ariz. App. LEXIS 267, Counsel Stack Legal Research, https://law.counselstack.com/opinion/st-josephs-hospital-medical-center-v-hansgen-arizctapp-1992.