Trustees of New Castle Common v. Megginson

77 A. 565, 24 Del. 361, 1 Boyce 361, 1910 Del. LEXIS 47

• Court: Supreme Court of Delaware
• Decided: June 21, 1910
• Status: Published

Opinion

Curtis, Chancellor,

delivering the opinion of the Court:

The case is before this Court on a writ of error to the Superior Court for New Castle County, and was an amicable action heard there on a case stated. The plaintiff was the collector of County taxes for New Castle Hundred, and claimed that land held by the defendant, The Trustees of New Castle Common, was liable to the payment of the tax levied against it for the year 1903, amounting to $522.12, while the defendant claimed that the premises are exempt from taxation as being the property of a corporation for charitable uses. In the agreement for docketing the amicable action the facts are fully set forth. As appears from the statement, William Penn in the year 1701 directed that “For the accommodation of the inhabitants of the town of New Castle,” one thousand acres of his land be surveyed “to the only use and behoof of the said inhabitants to lie in common,” and this survey having been made, the legal title to the land was by deed of the then Proprietaries of Pennsylvania conveyed to certain trustees and thereafter by them conveyed to the defendant, The Trustees of New Castle Common, a corporation created by the General Assembly of Delaware in 1792 to take title to the commons “for the use of the inhabitants of the town of New Castle.” The corporation was empowered by the charter to lease but not to sell the land, and appropriate the moneys in such manner as the trustees should in their wisdom direct. By the agreed statement of facts the net income has been used for the use of the inhabitants of the town of New Castle exclusively in the support of public schools, public improvements and charitable donations and gifts and for the inhabitants of the town generally.

The statute under which the exemption from taxation is claimed is an Act passed in 1796, published in the Revised Code as Chapter XI, sec tion 1, page 114, as follows:—

“All real and personal property, not belonging to this State, or the United States, or any county, church, religious society college or school, or to any corporation for charitable uses, shall be liable to taxation and assessment for public purposes. (Provided, that legacies for religious, charitable and educational purposes, shall not be subject to taxation.)”

In the Superior Court it was held:

“The defendant is not a corporation for charitable uses within the meaning of Section 1 of Chapter 11 of the Revised Code; that the property mentioned in the said case stated is not used for charitable purposes within the meaning of said section; that the net income, rents and profits arising from the said property are not used and expended for charitable purposes within the meaning of said section, but for such purposes as are the moneys raised and collected by municipal taxation; and that the said property is not exempt from assessment and taxation for County purposes, under the provisions of the said section.”

On December 13, 1907, judgment was found for the plaintiff and upon this judgment the writ of error was taken to this Court.

It will be seen from the above that the property taxed is owned by a corporation created for the sole purpose of administering the particular trust respecting this land and no other property, and the sole question is whether this trust was a charitable use. The trustees were limited in their use of the income of the property to such objects as were for the use, benefit and advantage of the inhabitants of the town, and in fact made such use of them. They had no power to undertake any other trust respecting any other property and were and are subject to supervision as other trustees respecting their administration of the trust. The question for decision is a very narrow one. Did the gift by William Penn constitute a charitable use or trust within a proper definition thereof as settled by precedents? The question"may be more broadly stated thus: Is a donation of land to trustees for the use and benefit of the inhabitants of a certain town a charitable use or trust?

Turning first to the decisions of our own Courts, we find that in Delaware charitable trusts have been considered by the Courts in several cases. Benjamin Potter, by will, gave part of his real estate to named trustees “to and for the support, maintenance and education of the poor white citizens of Kent County generally.” This gift was upheld as a charitable use and enforced by the Court of Chancery. In State vs. Griffith, 2 Del. Ch. 392, Chancellor Johns held that the jurisdiction to protect and enforce charitable uses was vested in the Court of Chancery in England prior to the Statute of 43 Elizabeth, Chapter 4, and was not founded on that statute, and that the Court of Chancery of the State of Delaware is vested with like jurisdiction, independent of that statute. Also that uncertainty as to the individual beneficiaries until appointment, or selection, by the trustee, or other designated agents, was a characteristic of charitable trusts and that such uncertainty did not therefore invalidate the gift under the Potter will. These conclusions were affirmed by the Court of Errors and Appeals in an appeal taken from Chancellor Johns’ decree, in Griffith vs. State, 2 Del. Ch. 421, Appendix. Both Courts held that the rule of law against perpetuities did not apply to that or any other charitable or public trust or use. Later the Court of Errors and Appeals, in Tharp vs. Fleming, 1 Houst. 593, affirmed a decree of Chancellor Johns restraining the sale of the Potter land by Commissioners created by an Act of the General Assembly for that purpose, and held that the Legislature had no power to authorize the sale. Afterwards at the request of Chancellor Saulsbury, Nathaniel B. Smithers, Esq., prepared an opinion as to the power of the Court of Chancery to order a sale of the land upon application of the trustee for sufficient reasons, and advised the Chancellor that such power was vestedy in the Court of Chancery as part of its inherent jurisdiction over the administration of charitable estates. The learned amicus curiae adopts the following language of Shelford on Mortmain in defining a public charity:

“Public charities are hardfy distinguishable from private; the .charter of the Crown does not make a charity more or less public, but only more permanent than it otherwise would be; but it is the extensiveness which will constitute it a public one. A devise to the poor of a parish is a public charity.”

This opinion of Mr. Smithers is reported in the Appendix to Vol. 8 of Delaware Chancery Reports. In Doughten vs. Vandever, 5 Del. Ch. 51 (1875), Chancellor Saulsbury was called on to construe the will of Amy Doughten, where there was ambiguity in the identification of the legatees, because of the indefiniteness of the corporate name of the beneficaries, though the will made clear the use to which the legacies were to be put. One of the gifts was of a part of the residue “To the Trustees and Managers of the Philadelphia Waterworks * * * to be applied to the benefit of the said institution or corporation.” This gift the Chancellor declared invalid, holding that it was not good at common law because there was no such corporation as that named in the will, the title to the waterworks of Philadelphia being in the City of Philadelphia, and it was not valid in equity because it was not a public charity. The Chancellor distinguished Jones vs. Williams Amb. 65.1, which was a gift in trust to bring in spring water to a town and keep the plant in good order. It is not important to consider whether the distinction was well taken, but it is of importance that Chancellor Saulsbury approved of Jones vs. Williams, and adopted as his own the definition of Justice Gray, in Jackson vs. Phillips, hereinafter quoted. Gifts to general public uses and for lessening the burdens of government are clearly recognized by Chancellor Saulsbury as charitable trusts or uses. From these decisions in the Delaware Courts it may be concluded that the Statute of Elizabeth was not the origin of charitable uses and is therefore not controlling in its designation of certain gifts as being public, charitable trusts, but rather as illustrative of what objects should be so considered; that the uncertainty of the beneficiaries is a characteristic of such benefactions; that they are not within the prohibition of the rule against perpetuities; and that any gifts to and for a general public use or lessening the burdens of government are valid as charitable trusts and uses.

It is obvious that the word “charitable” implies primarily a donation to the pqor, the sick, or the needy. But it undoubtedly has been given a much wider definition, as thus stated in Perry on Trusts, Vol. 2, Sec. 687:

“Charitable trusts include all gifts in trust for religious and educational purposes in their ever varying diversity; all gifts for the relief and comfort of the poor, the sick and the afflicted; and all the gifts for the public convenience, benefit, utility or ornament, in whatever manner the donor desires to have them applied.”

This broad meaning the word “charity” had in 1796, the time when the exemption Act in question was passed. Trusts for public purposes independent of benevolence, educational or religious purposes were held to be charitable trusts many years before the Act was passed. In 1592 a gift to support bridges and highways was held by Lord Coke to be a public and charitable gift in Porter’s Case, 1 Coke 26. The case of Jones vs. Williams, supra, was decided in 1767, wherein Lord Camden held that a gift of money to be applied by trustees for bringing spring water into a town by pipes and for keeping the. plant in repair was a charitable trust, and there gave the oft quoted definition of a charitable use, which has survived to this day as the one comprehensive one, viz.: “A gift to a general public use which extends to the poor as well as to the rich.” The statute of Elizabeth itself furnishes material for a definition, though it was not an all inclusive statute. It recited that moneys had been given in trust for certain objects, naming them, and that there had been abuses of trusts, and empowered certain officers to investigate and correct these abuses. It may well be said, therefore, that it does not define charity, or exclude as not charitable all objects not named therein; but the enumerations therein are illustrative of the trusts in which abuses existed. As was said by Sir John Leach, in Atty. Gen. vs. Heclis, “It is not material that the particular public or general purpose is not expressed in the Statute of Elizabeth, all other legal public or general purposes being within the equity of that Statute. ’ ’ But it should be noted that this Statute of 43 Elizabeth, c. 4, commonly called the Statute of Charitable Uses, passed in 1601, includes in the enumeration of charitable objects and purposes, to which it relates, gifts for public purposes, where benevolence is not an element. The statute includes existing trusts for “repairs of bridges, ports, havens, causeways, churches, sea banks and highways.” All these are public works such as municipalities construct and maintain for the general comfort, convenience or utility of the particular country. Such also would be municipal buildings, parks and museums. If a trust to provide repairs for highways or bridges be charitable uses, so also, in principle, would a trust to make highways, or build bridges, be charitable uses. It may safely be asserted, therefore, that both by the adjudged cases cited and others that might have been cited, and by the Statute of Elizabeth, at the time the exemption Act in question was passed, the word “charity” had a well known and acknowledged meaning, broad enough to include every gift for a general public use. Such definition must therefore be read into this statute in deciding this case. Where a statute uses a word which is well known and has a definite sense at common law, or in the written law without defining it, it will be presumed to be used in that sense and will be so construed. Sutherland on the Construction of Statutes, Sec. 398. In addition, however, there are many cases decided in England and in this Country which sustain this interpretation of the word “charitable.”

The following are illustrations of this numerous class of cases establishing as charitable trusts gifts for public purposes, independent of benevolent, educational or religious purposes: A trust “for purposes conducing to the good of the County of W. and the parish of L. especially.” Atty. Gen. vs. Lonsdale, 1 Sim. 105. For the improvement of a specified town. Atty. Gen. vs. Heelis, 2 Sim. & Stu. 67; Howse vs. Chapman, 4 Ves. 542. Gifts to discharge a tax on a commonalty. The tax no longer existed but the Chancellor held it a charity to relieve the whole community of a tax due from it, and directed that a scheme be devised for using the income of the fund for the benefit of the whole community. Atty. Gen. vs. Bushley, 24 Beav. 290. A gift for the advantage and benefit of Great Britain. Nightingale vs. Goulbourn, 5 Hare 484 (2 Phil. 594). Gifts to pay part of the national debt. Ashton vs. Langdale, 4 Eng. L. & Eq. 139; Newland vs. Atty. Gen., 3 Mer. 684 (1809). A gift of real estate, the profits to be used for repairing certain highways, held to be a valid charitable trust. Collison’s Case, Hob. 136. A trust to build a bridge or life boat for a town. Johnson vs. Swann, 3 Madd. 457; Forbes vs. Forbes, 23 Eng. L. & Eq. 335. Money to be applied to “charitable, beneficial and public works at and in the City of Daca in Bengal.” Mitford vs. Reynolds, 1 Phil. 192 (1841) 41 Eng. Reprint 604. A gift “for the benefit and ornament” of a town. Faversham vs. Ryder, 27 Eng. L. & Eq. R. 367. A gift of money to be spent for the use and benefit of a town or of the institutions thereof. Mayor &c. of Wrexham vs. Tamplin, 21 Weekly Rep. 768. A trust to use the rents of land in paving, lighting or cleaning the streets of a town, conveying water thereto and other public improvements. Atty. Gen. vs. Heelis, 2 Sim. & Stu. 67. For erecting a town house. Coggeshall vs. Pelton, 7 Johns. Ch. 292. For planting shade trees. A gift to the City of Philadelphia in trust, the income to be expended in planting shade trees, “ especially in situations now exposing my fellow citizens to the heat of the sun.” Cresson’s Appeal, 30 Pa. St. 434. A gift of money, the interest of which should be ‘ ‘ laid out in repairing highways, and bridges” of a certain town. “The object of the devise is to confer a public benefit; something beneficial and necessary to all persons indiscriminately, quite as much as gifts to institutions for learning, or religion, or to the poor and helpless.” Hamden vs. Rice, 24 Conn. 350.

From these and other cases which were cited by the counsel for the appellant, it is evident that the following definition of charitable'uses stated by Justice Gray, in Jackson vs. Phillips, 14 Allen 566, is sound and well established by many cases:

“A charity, in a legal sense, may be more fully defined as a gift to be applied, consistently with existing laws, for the benefit of an indefinite number of persons, either by bringing their hearts under the influence of education or religion, by relieving their bodies from disease, suffering, or constraint, by assisting them to establish themselves for life, or by erecting or maintaining public buildings or works, or otherwise lessening the burdens of taxation. It is immaterial whether the purpose is called charitable in the gift itself if it is so described as to show that it is charitable in its nature.” This definition was adopted by Chancellor Saulsbury in Doughten vs. Vandever, and has been quoted by other Courts. Indeed, there seems to be few if any cases holding contra wise. The case at bar is within this definition. The uses for which the corporation was created was “for the use and benefit and behoof of the inhabitants of the town of New Castle.” It is public, because it relates to all the inhabitants of a particular community and not to any classification of such inhabitants, or to any group thereof separately from the other inhabitants by any distinction of race, creed, social rank, wealth, poverty, occupation, or business, or even separated by geographical lines subdividing the community into wards, districts or otherwise. It is general, in that the objects to be accomplished are as wide as possible. They may be educational, philanthropic, eleomosynary or religious. They may be the erection of public -works or buildings, public streets, and any other form of municipal improvement. It is indefinite, because it is not for any particular person, or set of persons fixed by any artificial or arbitrary selections, designated in the gift. It is enduring because it is not for a day, or a generation, but has the element of permanence and continuity for coming generations.

The particular uses to which the rents received from the land have been, in fact, put, as shown by the agreed statement of facts, are quite immaterial and have no bearing on the question. But it should be noted that these actual uses were those which distinctly belong to charitable uses. A trust created to accomplish either of the purposes for which the proceeds of the land have been used would be held to be a charitable trust—viz.: a trust to support the public schools, for municipal improvements, or for gifts to needy persons of a community. It is also quite unimportant that these purposes are among those for which moneys are raised by the assessment and collection of municipal taxes. It rather demonstrates the public character and generality of the purposes and objects of the trust to show that property within the town is subjected to taxation for the same purposes by the municipality, for taxation is of the property of the rich and poor and for the benefit of both and the burdens of taxation are lessened by reason of this trust.

It was urged, however, by the appellee that the gift was not to a corporation for charitable uses because the land itself was not so used, but the income thereof, and that the land being used as a source of revenue was subject to assessment and taxation. Many cases were cited in the comprehensive brief of counsel for the defendant in error to support this position. But a careful examination of the constitutions and statutes of the several states in which these cases were decided, as set out in the appellants’ brief, shows that these cases do not apply aptly to the case at bar. Almost all the states have constitutional or statutory regulations different from those of our own State, and which control the courts in deciding whether particular property is exempt from taxation. None of them are identical with, or are as broad and general as the Delaware statute. In Arkansas, Colorado, Connecticut, Indiana, Iowa, Maryland, Minnesota, North Dakota, Rhode Island, and New Jersey, the exemption expressly relates to buildings used for charitable purposes. In Arkansas, Florida, Illinois, Kansas, Missouri, Mississippi and New Jersey the use to which the property is put for charitable purposes is clearly made the test of exemption and not the ownership. The occupation of the property by charitable institutions is the test enacted in Florida, Massachusetts, Michigan, North Dakota, and South Carolina. Other states, such as Arkansas, Georgia, Louisiana, Massachusetts, Michigan, Minnesota, South Carolina and Tennessee, exempt “institutions” of public charities, indicating the habitation in which the charitable work is carried on, as distinct from the property owned by the organization by which its work is done. Some states expressly make subject to taxation such of the property owned by charitable corporations as is held as an investment or source of profit or revenue, viz.: Florida, Illinois, Iowa, Louisiana, Minnesota, Mississippi, North Dakota, Ohio, Pennsylvania, Tennessee and West Virginia. The decisions of the courts of these states, therefore furnish no help to this Court in construing the Delaware statute.

The recent amendments of the exemption Act under consideration confirm the interpretation herein put on the Act. By an Act approved April 5, 1909, the Act in question was so changed as to read:

“All real and personal property not belonging * * * to any corporation created for charitable purposes and not held by way of investment, shall be liable to taxation and assessment for public purposes.” 25 Del. Laws, c. 36, p. 82.

The conclusion of this Court, therefore, is that the gift by William Penn of the land in question constituted a charitable use or trust, and that that land held and owned by the defendant, a corporation created for the purpose of administering that trust, was real property belonging to a corporation for charitable uses and therefore exempt from taxation for public purposes. It was, therefore, not liable to the tax mentioned in the case stated, and the judgment of the Court below should be reversed.

Let a judgment be entered accordingly, and judgment entered for the appellant, the defendant in the Court below, with costs.