Thursday, August 28, 2014

The Latest Ruling on "The Most Litigated Will In History"

Pennsylvania has a long and colorful history with charitable trusts and bequests coming from wealthy entrepreneurs, including the histories of The Barnes Foundation and The Hershey Trust, both of which have generated "classic" cases studied in law school courses.

This week, a Philadelphia Court of Common Pleas (the trial level court) issued the latest decision on the Stephen Girard Trust from 1831, the "painstaking details" of which created Girard College.  For much of its existence Girard College functioned as a multi-year, residential boarding school program for orphan boys.  Past court cases have resulted in rulings that permitted significant "deviations" from the terms of the wealthy philanthropist's will, including admission of minority students, female students, and expansion of the definition of "orphans" to admit students who still had one living parent.

At issue now is whether the trustees (actually a "Board of City Trusts" created by statute in 1869 to administer trusts left to Philadelphia for charitable purposes) will be permitted to further "deviate" from the settlor's original vision for the school, in order to create a more "financially sustainable" model. 

Despite the long history of changes, leading the court to describe Stephen Girard's will as "the most litigated will in history," the court treated the latest proposals -- elimination of the residential program and "high school" classes -- as triggering a stricter standard of review, under the doctrine of cy pres:

"This Court does not agree that the requested modifications relate to administrative provisions of Stephen Girard's Will.  The design of Girard College as a boarding school, intended to provide a residence, as well as an education to its students is reflected in the very terms of the Will....

 

Rather than an administrative decision, this Board [of City Trusts, acting as trustees] is seeking a cy pres remedy.  This doctrine, unlike administrative deviation, is applied where a change is sought to the purpose of the trust.... Divorcing the residential aspect of Girard College and the high school program from a Girard education is inconsistent with the very terms of the Will and the directions of the testator.

 

The cy pres doctrine, now codified,... permits this Court to approve a change in the terms of a Trust to direct it to purposes that are as close as reasonably possible to the settlor's original intent and that are possible to fulfill.  The cy pres doctrine cannot be invoked until it is clearly established that the direction of the donor cannot be carried into effect."

After reviewing the evidence about the operating finances of Girard College, the court takes the time to commend the trustees "for beginning to confront the myriad of financial, educational and institutional challenges currently facing Girard College."  Nonetheless, the court concludes that based on the financial information it  "cannot permit the Board to modify the Will of Stephen Girard as requested.... This Court cannot treat those proposed changes as administrative deviations and will not apply the cy pres doctrine absent a showing that achieving those objectives is impracticable."

In addition to the discussion that clearly distinguishes the law of "deviation" from "cy pres," the outcome is also notable because:

  • The court had earlier rejected "standing" for a Girard College alumni group that sought to oppose the proposed changes;  
  • The changes were denied despite the fact that the Attorney General, who has statutory standing to enforce terms of charitable estates in Pennsylvania, had apparently declined to take action;
  • The court appointed an individual to serve as "amicus curiae" to examine and report on the Trustees' proposal to modify the trust terms and the individual's recommendations were clearly important to the ruling. 

Pennsylvania Attorney Neil Hendershot (and Dickinson Law alum)  who represented the Girard College Alumni Association, and who alerted me to this interesting decision, has additional details on his Pa Elder, Estate and Fiduciary Law Blog.  Thanks, Neil!

Whether the trial court's decision will be appealed is not yet known. 

And by the way, as evidence of the long litigation history of the Stephen Girard Trust, this latest ruling is filed under what appears to be the original -- or at least a very early -- Orphan's Court docket number: "O.C. No. 10 DE of 1885." A docket number that lasts 129 years? Impressive.

http://lawprofessors.typepad.com/elder_law/2014/08/the-latest-ruling-in-the-most-litigated-will-in-history-.html

Current Affairs, Estates and Trusts, State Cases, State Statutes/Regulations | Permalink

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