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Burr v. Brooks

OPINION FILED JANUARY 20, 1981.

LUMAN BURR

v.

JAMES R. BROOKS ET AL. (JOSEPH F. BOHRER, TRUSTEE, ET AL., APPELLEES; THE CITY OF BLOOMINGTON ET AL., APPELLANTS).



Appeal from the Appellate Court for the Fourth District; heard in that court on appeal from the Circuit Court of McLean County, the Hon. Wendell E. Oliver, Judge, presiding.

MR. CHIEF JUSTICE GOLDENHERSH DELIVERED THE OPINION OF THE COURT:

Plaintiff, Joseph F. Bohrer, trustee of a testamentary trust created under the will of John M. Scott, deceased, brought this action in the circuit court of McLean County seeking instructions concerning the administration of the trust. Named as parties defendant were the Attorney General and the city of Bloomington (City). Morgan-Washington Home (Morgan-Washington), a not-for-profit corporation, and Bloomington Board of Education, School District No. 87 (the School District), were permitted to intervene. The circuit court awarded six sevenths of the trust residue to Morgan-Washington and one seventh to the School District. The City appealed, the School District and Morgan-Washington cross-appealed, and the appellate court affirmed in part, reversed in part, and remanded the cause for further proceedings (75 Ill. App.3d 80). We allowed the petitions of the City and Morgan-Washington for leave to appeal.

John M. Scott died testate on January 21, 1898. He had served 10 years as a county judge, 8 years as a circuit judge and 18 years as a justice of the Supreme Court of Illinois, including three terms as chief justice. The will, executed in 1890, provided for a life estate for his wife in his residuary estate and for the payment of fixed annuities to certain annuitants, the last of whom died on December 14, 1976. The 11th paragraph of the will, which became operative on the death of the last surviving annuitant, directed the trustee to convert most of the real estate and all of the tangible personal property to cash or interest-bearing securities. Those funds were to be paid to the City of Bloomington and used by the City to "erect and construct" a hospital on the site of the home in which the testator had resided, and an adjoining lot. This was to be called "Scott City Hospital" and was to be operated by the City, with the advice of the elders of the Second Presbyterian Church. The amount expended for erection and furnishing of the hospital was to be no more "than the amount of said trust estate will justify in the judgment of reasonable persons who may be approved by said city to have charge of the erection and furnishing of said hospital buildings." The funds remaining after erection and furnishing of the building were to be held in trust as an endowment for the operation of the hospital. The hospital was to be for the use of "all sick or otherwise disabled persons," especially those "who may be injured by accident and who may have no friends at hand to care for them or who may have no money or other means to pay for care and medical or surgical services." Those who wished to be admitted and were able to pay were to be charged a "reasonable sum" for services.

The 12th paragraph of the will provided that in the event the city council by resolution "declined to accept the trust hereby created for the erection and maintenance of said hospital," the trustee was to procure an act of incorporation for "establishing and maintaining an `Industrial School for Girls.'" The trustee was directed to convey property to the corporation for a site for the school and pay over to the corporate officers all of the trust funds which would have been paid to the City had it accepted. The 12th paragraph also provided for the advice of the elders of the Second Presbyterian Church of Bloomington and again specified that only a "reasonable sum" be expended on the building, with the balance to serve as an endowment for the support of the school.

In its answer the City requested that the assets of the trust be distributed to it in accordance with the will. On February 17, 1978, after it had filed its answer to plaintiff's petition, the City, in response to an order of the circuit court that it notify the trustee of its intention to accept or reject the gift, filed a resolution of its council which purported to accept the trust. The resolution stated that there were "sufficient hospitals" in the area and that the real estate described in the will as the site where it was to be situated was "not now suitable" for a hospital. The resolution recited several "findings" made by the city council pertaining to the community's need for "comprehensive, primary health care services" and improved emergency medical services. In order to meet these needs the resolution proposed that the trust be administered by the City "under the continuing jurisdiction of the circuit court' and that (a) part of the trust income be used to provide health care for those unable to pay and who were not eligible for assistance; (b) a portion of the principal be used to establish a family care and diagnostic center which would memorialize the name of John M. Scott and provide free services to the indigent and charge a reasonable sum to others; and (c) as an alternative or supplement to (b) an emergency medical services program would be established.

Answers filed by Morgan-Washington and the School District requested that the court find (1) that it is either impossible, impractical or illegal to carry out Justice Scott's specific charitable intent, and (2) that a general charitable intent was expressed which would justify application of the cy pres doctrine. The School District alleged the existence of a general charitable intent "to improve industrial education in the City of Bloomington," and requested that the trust funds be used as an endowment fund for the advancement of vocational education in the Bloomington area and to finance projects "in the best interests of the area's vocational educational needs." Morgan-Washington alleged the general charitable intent under the 12th paragraph to be "to improve health care facilities and housing and educational training for girls in the City of Bloomington," and alleged that there was no organization or entity which fulfilled the general charitable intent expressed in the 11th paragraph. It requested that the trust funds be used for housing and educational projects and programs at Morgan-Washington and, in the alternative, that the will be construed as having a general charitable scheme intended to benefit both types of charities named in the 11th and 12th paragraphs of the will and that it be included as a beneficiary.

At trial, evidence was presented concerning the need for another hospital in Bloomington. At the time the will was executed there was one hospital in Bloomington, but at the time of trial there were three in the Bloomington-Normal area, with a combined occupancy rate of 73%. Several witnesses expressed the opinion that there was no need for another hospital and that, if one were constructed, it would not be possible to obtain a license or permit to operate it. Testimony was presented concerning the number of indigents who, though unable to pay for medical care, nevertheless failed to qualify for assistance. The City also presented a supplemental resolution of its council which described in detail the nature of the facility it proposed in order to meet the community's health-care needs. That facility would provide "multi-phasic health screening services" designed to facilitate the early detection and treatment of illness.

Morgan-Washington was shown to be the successor to the Women's Industrial Home of McLean County, which was created in 1889 pursuant to "An Act to aid industrial schools for girls" (1879 Ill. Laws 309; now Ill. Rev. Stat. 1979, ch. 122, par. 646 et seq.). Industrial homes, as originally conceived, provided custodial care and vocational training for their residents. In the girls' schools, a typical curriculum included sewing, cooking, housekeeping and ironing. These subjects were not taught in the public schools of the time, which were largely college preparatory. There are presently no industrial schools of that type, and the public schools have since taken over vocational education. Morgan-Washington presently is licensed by the Illinois Department of Children and Family Services as a residential facility and expected to be licensed as a child-welfare agency, which would permit it to recruit and license foster families. Most Morgan-Washington residents are classified as minors in need of supervision, or delinquents. They are educated either in the local public schools or at the home in cooperation with the School District.

The School District presented evidence that it has a broad program of vocational and industrial education which considerably exceeds that offered in an 1890's industrial school for girls.

The circuit court found that the City's proposal was a "refusal of the trust," which operated to invoke the 12th paragraph of the will. Because the operation of an industrial school for girls, as the testator used that term, was impossible or impractical at present, the court ordered distribution of the funds to the School District and Morgan-Washington under the doctrine of cy pres. The appellate court affirmed that portion of the circuit court's judgment which held that the City's proposal constituted a technical refusal of the trust and that the implementation of the testator's alternative charitable purpose was impractical or impossible. The appellate court reversed that portion of the circuit court's judgment which applied the doctrine of cy pres to the second charitable purpose but not to the first, saying:

"At rehearing, the court should determine which proposal or proposals [the City's or the intervenors'] present a viable method of most nearly following the interest of this generous testator. The court should consider that the gift to the city for the purpose of building a hospital was his first choice, but should also consider how closely each proposal comes to meeting the design of either of the `two great charities' he envisioned. The court would not be precluded from dividing the gift." 75 Ill. App.3d 80, 88.

The City contends that there can be no failure of the gift made under paragraph 11 "so long as the charitable purpose embodied therein may be fulfilled," that "equity will consider the charitable purpose of the donor as the substance of the gift," and that "the mode of effectuating that purpose is a mere incident of the gift." It contends that the testator's "primary charitable objective," as articulated in the 11th paragraph of the will, was "the provision of care and medical or surgical services to the sick, disabled and injured, especially those unable to pay therefor." It argues that the City's proposal as to the implementation of the trust should be approved under the doctrine of equitable deviation.

The doctrine of equitable deviation is stated in section 381 of the Restatement (Second) of Trusts, ...


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