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Keywords

trustwillcorporation
trustwillcorporationobjectionoverruled

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In re Niven’s Estate, 180 Misc. 767, 42 N.Y.S.2d 739

Facts

Maria L. Niven's will established a trust for the maintenance of the rectory of the Protestant Episcopal Church of the Holy Spirit in Nice, France. After her death in 1896, the church operated for about 44 years until World War II forced its closure. Disputes arose between the trustee and various church corporations regarding the approval of the trustee's informal account and the application of trust income, particularly concerning the rector's unpaid salary and the intended use of the funds.

The testatrix died in 1896. In her will she gave to a corporate trustee, which was subsequently merged with the present corporate trustee, the sum of ten thousand dollars ‘in trust to apply the net income thereof to the maintenance, repairs, and furnishing of the rectory of the Protestant Episcopal Church of the Holy Spirit at Nice, France, the rectory having been built and furnished by me and presented to said church, * * *.

Issue

The main legal issues include the validity of the agreement approving the trustee's informal account, the applicability of the cy pres doctrine to redirect trust income for the rector's salary, and whether the trustee should pay accumulated income to the New York corporation.

The controversy involves first the validity of an agreement approving the informal account of the trustee made pursuant to the action in 1936 and 1937 of the officers and congregation of the French corporation.

Rule

The court applied the principle that the direct purpose of a charitable gift must be carried out if possible, and that agreements approving informal accounts by beneficiaries are valid. The cy pres doctrine may only be invoked when it becomes impossible or impracticable to carry out the direct purpose of the trust.

Where the maker of a will imposes a condition as to the object to which the principal or income of a charitable gift is to be applied, the direct purpose must be carried out if at all possible.

Analysis

The court found that the approval of the informal account by the French corporation's officers was valid, as they were the same individuals as those in the New York corporation. The court ruled that the cy pres doctrine could not be applied to pay the rector's salary, as the cessation of church activities was deemed temporary and the income should be preserved for its intended purpose of maintaining the rectory. The trustee was justified in withholding payments until the church's reopening was confirmed.

The validity of agreements approving informal accounts by beneficiaries of estates has been the subject of recent decisions which have given recognition to such agreements.

Conclusion

The court upheld the validity of the trustee's informal account and denied the application to redirect trust income for the rector's salary. The trustee was not required to pay over the accumulated income to the New York corporation until the church's activities resumed.

The objection filed to the account by the New York corporation upon this phase of the case, is therefore, overruled and its application to compel the trustee to account again for the period covered by the informal account is denied.

Who won?

The trustee prevailed in the case, as the court upheld its actions regarding the informal account and the application of trust income, emphasizing the need to adhere to the testatrix's intentions.

The Surrogate holds that the approval of the informal account of the trustee by resolutions duly adopted in 1936 and 1937, by the officers of the French corporation, was valid and conclusive.

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