2014-04-04 Respondents' Initial Trial Brief

TABLE OF CONTENTS

Page

I . INTRODUCTION...... 1 4 II. THE DEED OF TRUST'S EXPRESS PURPOSE MUST BE FOLLOWED...... 1 5 III. PETITIONER BEARS THE BURDEN OF PROOF...... 2 IV. THE TRUST MAY NOT BE MODIFIED UNDER THE CYPRES DOCTRINE...... 3 6 V. THIS COURT SHOULD NOT APPLY PROBATE CODE SECTION 15409 TO 7 DEFEAT NUNN'S INTENT TO CONTINUE A MEN'S COLLEGE...... 4 8 A. The Purpose of the Deed of Trust Is Explicitly Stated...... 6 B. Continuation of Impair 9 the Trust Would Not this Purpose...... 6 C. Petitioner Cannot Establish that Nunn Neither Knew Nor Anticipated 10 Changed Circumstances that Now Defeat or Substantially Impair Accomplishment of the Trust's Purpose...... 6 11 D. The Proposed Modification Is Not Necessary...... 7 12 VI. THE COURT CANNOT APPLY COMMON LAW EQUITABLE DEVIATION TO 13 CHANGE THE PURPOSE OF THE DEED OF TRUST...... 7

14 A. Common Law Equitable Deviation Does Not Apply to the Petition...... 8 B. Common Law Equitable Deviation Applies Only in Exceptional 15 Circumstances and Where Necessary to Accomplish the Trust's Purpose...... 8 16 C. Petitioner Does Not Meet The Requirements For The Court To Apply Its Common Law Equitable Powers To Modify The Trust...... 9 17 VII. THE DEED OF TRUST MAY NOT BE MODIFIED UNDER SECTION 15403 18 BECAUSE THAT STATUTE DOES NOT APPLY TO CHARITABLE TRUSTS, NOT ALL BENEFICIARIES CONSENT, AND THERE IS NO REASON 19 OUTWEIGHING THE INTEREST IN ITS ACCOMPLISHMENT...... 10 20 A. This Court Should Not, As A Matter Of Law, Apply Section 15403...... 11

21 B. Petitioner Fails to Meet the Requirements of Section 15403...... 12 1. Not All Beneficiaries Consent...... 12 22 a. The Attorney General's Consent Cannot Compel Modification...... 12 23 b. The Current and Admitted Students Must Also Consent...... 13 24 (i) Factor One: Is the Interest Current or Potential?...... 13 25 (ii) Factor Eight: Direct Input on Trust Affairs...... 13 (iii) Factor Nine: The Settlor's Intent...... 14 26 2. Education of Promising Young Men Is a Material Purpose of the 27 Trust...... 14 28

433854.1 _i_ OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1

2 TABLE OF CONTENTS (cont'd) 3 Page

5 3. There Are No Reasons to Modify the Trust that Outweigh the of the. Trust...... 15 6 Accomplishment of a Material Purpose VIII. CONCLUSION ...... 15 7

9 ~

433854.1 -11- OBJECTORS'/RESPONDENTS' TR[AL BRIEF 1 TABLE OF AUTHORITIES

2 Pages)

3 FEDERAL CASES

4 MCI Telecommunications Corp. v. America Tel. and Tel. Co. (1994) 512 U.S. 218 ...... 5 5

6 STATE CASES 7 Adams v. Cook 8 (1940) 15 Cal.2d 352...... 8, 9

9 Arman v. Bank of America, N. T. & S.A. (1999) 74 Ca1.App.4th 697...... 3 10

Boys and Girls Club of Petaluma v. Walsh 11 (2008) 169 Cal.App.4th 1049...... ll

12 Brown v. Superior Court (1982) 137 Ca1.App.3d 778 ...... 11 13 Burkett v. Capovilla 14 (2003) 112 Cal.App.4th 1444, 1449...... 2

15 Estate of Bothwell (1944) 65 Cal.App.2d 598 ...... 2 16

Estate of Mabury 17 (1976) 54 Ca1.App.3d 969...... 3

18 Estate of Simoncini (1991) 229 Ca1.App.3d 881 ...... 2 19

Estate of Traung 20 (1962) 207 Cal.App.2d 818 ...... 9

21 Gapusan v. Jay (1998) 66 Ca1.App.4th 734...... 8 22 Ike v. Doolittle 23 (1998)61 Cal.App.4th 51 ...... 8, 9

24 In re Ferrall's Estate (1953) 41 Ca1.2d 166...... 2 25

In re Marriage of Plescia 26 (1997) 59 Ca1.App.4th 252...... 8

27 In re Munson's Estate (1942) 54 Cal.App.2d 590...... 2 28

433854.1 -111- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1

2 TABLE OF AUTHORITIES (cont'd) 3 Pages)

5 Lynch v. Surprise Valley Lodge No. 2 (1972) 26 Ca1.App.3d 265 ...... 3 6 Moxley v. Title Ins. &Trust Co. 7 (1946) 27 Ca1.2d 457...... 3, 7, 8

8 Newman v. Wells Fargo Bank, N.A. (1996) 14 Ca1.4th 126...... 2 9 Roddenberry v. Roddenberry 10 (1996) 44 Ca1.App.4th 634...... 2

11 Stanton v. Wells Fargo Bank and Union Trust Co. (1957) 150 Cal.App.2d 763 ...... 8, 9 12

13 OUT OF STATE CASES 14 Craft v. Shroyer 15 (Ohio Ct. App. 1947) 74 N.E.2d 589 ...... 5

16 Speth v. Speth (N.J. Super. Ct. Ch. Div. 1950) 74 A.2d 344 ...... 15 17

19 Probate Code 20 § 24 ...... 12 § 15002 ...... 7 21 § 15004 ...... 11 § 15403 ...... 10,11,12,13 22 § 15409 ...... passim § 16002 ...... 2 23

24 OTHER AUTHORITIES 25 5 Scott and Ascher on Trusts (6th ed. 2011) § 33.4, Termination or Modification on Account 26 of Unanticipated Circumstances...... 7

27 Black's Law Dict.(6th ed. 1990) p. 387, col. 2 ...... 3

433854.] -1V- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 TABLE OF AUTHORITIES 2 (cont'd) Pages)~ 3

4 CLRC Recommendation Trust Law (1986) 5 18 Cal. L. Rev. Comm'n ...... 11

6 Restatement 2d Trusts, § 399 ...... 3, 5

7 Restatement 3d Trusts, § 65 ...... 11, 15

8. Restatement 3d Trusts, § 66...... 5

9 Restatement 3d Trusts, § 67 ...... 3, 5

10. Uniform Trust Code, § 411 ...... 11

11'

4338541 -V- OBJECTORS'/RESPONDENTS' TRIAL BRIEF I. INTRODUCTION.

2 L.L. Nunn, who died in 1925, established Deep Springs College as a men's college, deeding

3 considerable property under a November 5, 1923 Deed of Trust (the "Deed of Trust", Ex. 1 ~) The

4 Deed of Trust expressly states its purpose. The Court has already ruled that under the plain

5 language of the Deed of Trust, "[t]he Trust can not be construed as giving the Trustees discretion to

6 ~ admit female students." (Rulings and Orders, filed Feb. 13, 2013, at 9.)

7 Petitioner David Hitz, Chairman of the Board of Trustees of the L.L. Nunn Trust, seeks to

8 ~ modify the Deed of Trust to do precisely what the Court has ruled that instrument prohibits. He

9 seeks relief under four theories: cy pres, statutory equitable deviation, common law equitable

10 deviation, and consent.

11 The evidence- at trial will show that Petitioner cannot meet his burden of proof as to any of

12 ~ these theories. Judgment must be entered for the Respondents, trustee Kinch Hoekstra and former

13 ~ trustee Edward Keonjian, and modification must be denied.

14 II. THE DEED OF TRUST'S EXPRESS PURPOSE MUST BE FOLLOWED.

15 The Deed of Trust expressly states the purpose of the L.L. Nunn Trust:

16 The purpose for which the property hereby conveyed and the rents, income, profits, and proceeds thereof, shall be used by said trustees is to provide for and carry on 17 educational work in the State of California similar to and in development of the work already inaugurated by grantor at Deep Springs in Inyo County, California, 18 but in such manner and form and at such place or places within said state as said 19 trustees in good conscience and the exercise of their best judgment may determine, for the education of promising young men, selected by said trustees or as they may 20 prescribe, in a manner emphasizing the need and opportunity for unselfish service in uplifting mankind from materialism to idealism, to a life in harmony with the 21 Creator, in the conduct of which educational work democratic self government by the students themselves shall be a feature as is now the case at said Deep Springs, 22 and which work shall be carried on not for profit but solely for the advancement of 23 the purpose hereinabove mentioned.

24 (Ex. 1 at 87, ¶ 1 ("Purpose Statement").) Petitioner claims that "to fulfill L.L. Nunn's purpose in

25 establishing the [Deep Springs College]," the Court must "modify the [Deed of Trust] to allow the

26 Trustees to admit female students ...." (Petition, filed Feb. 6, 2012, ¶¶ 7, 25.) As Nunn's purpose

27 ' Referenced exhibits are attached hereto with the indicated numbers. 28

433854. -1- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 in establishing the institution was instead to provide solely for the education of promising young

2 men in a specified manner, that purpose simply cannot be fulfilled by educating women.

3 A trust must be administered in accordance with the intentions of the settlor. (In re Ferrall's

4 Estate (1953) 41 Ca1.2d 166, 176; Newman v. Wells Fargo Bank, N.A. (1996) 14 Ca1.4th 126, 134

5 (same).) "[T]he paramount rule in the construction of wills is that the intention of the testator must

6 ~ be given effect as far as ssible. ... [A]t all times such intention is of supreme importance, and all

7 other rules of construction must yield to it."3 (In re Munson's Estate (1942) 54 Ca1.App.2d 590, 592

8 (emphasis added).) In ascertaining the testator's intent, "the intention to be determined is that which

is actually expressed in the language of the will." (Estate ofSimoncini (1991) 229 Ca1.App.3d 881,

10 889(emphasis in original).)

11 [T]here are limitations within which trustees and the court must keep in the administration of trusts. The plan of the trustor must be followed. It may not be 12 departed from in particulars wherein it is specific, merely because it may be considered in those particulars to be unwise. The trustee cannot substitute his own 13 plan because he thinks it is a better one, and if he does the court should not approve 14 his action to the prejudice of any beneficiary, even if it has operated to the general advantage of the estate. 15

16 ~ (Estate ofBothwell (1944) 65 Cal.App.2d 598, 604.) Nunn's plan is stated in the Deed of Trust; the

17 ~ controlling element of that plan is laid out in the Purpose Statement. The trustees cannot substitute

18 ~ their own plan —coeducation —because they think it is better.

19 III. PETITIONER BEARS THE BURDEN OF PROOF.

20 Petitioner bears the burden of proof on all of his claims. "Whatever plaintiff is obligated to

21 ~ plead, plaintiff is obligated to prove." (Roddenberry v. Roddenberry (1996)44 Ca1.App.4th 634,

22 654.) Plaintiff has the burden to prove the facts supporting cy pres (Lynch v. Surprise Valley Lodge

24 ~ Because "[t]he trustee has a duty to administer the trust solely in the interest of the beneficiaries" (Prob. Code, § 16002), and the class of beneficiaries here is that of promising young men, plan to 25 educate women in place of roughly half of the men it has been educating can hardly be consistent with their duty. 26 3 The same general rules of interpretation apply to "a will, trust, deed and any other instrument." 27 (Burkett v. Capovilla (2003) 112 Ca1.App.4th 1444, 1449.)

433854,1 -2- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 No. 2(1972) 26 Ca1.App.3d 265, 272), equitable deviation (see Moxley v. Title Ins. &Trust Co.

2 (1946) 27 Ca1.2d 457, 468), and the statutory claims (all of which state facts which must be shown

3 to obtain relied. If Petitioner fails to meet his burden,judgment must be entered for Respondents.

4 IIV THE TRUST MAY NOT BE MODIFIED UNDER THE CYPRES DOCTRINE.

5 "The rule of cypres is a rule for the construction of instruments in equity, by which the

6 ~ intention of the party is carried out as near as maybe, when it would be impossible or illegal to give

7 ~ it literal effect." (Arman v. Bank ofAmerica, N.T. & S.A. (1999) 74 Ca1.App.4th 697, 703, fn. 11

8 (quoting Black's Law Dict. (6th ed. 1990) p. 387, col. 2); Estate ofMabury (1976) 54 Cal.App.3d

9 969, 985 ("It is to be noted that an essential ingredient of the application of the deviation and cy pres

10 doctrines is the requirement that the specific charitable purpose of the trust creator has become

11 either impossible or impractical of fulfillment.").) The common law doctrine of cy pres provides

12 the sole legal standard according to which the particular purpose of a charitable trust may be altered

13 on petition. (Rest.2d Trusts, § 399; Rest.3d Trusts, § 67.)

14 A mere transient difficulty in carrying out the trust purpose does not warrant application of

15 cy pres. "We interpret these trust doctrines as requiring a permanency of the impossibility or

16 impracticality of carrying out the specific charitable purpose or purposes of the creator of a trust."

17 (Mabury, supra, 54 Ca1.App.3d at p. 985.)

18 Here, Petitioner cannot show that Nunn's specific charitable purpose stated in the Deed of

19 Trust is impossible or impracticable to carry out. Indeed, Petitioner's expert, Dr. L. Jackson Newell,

20 has testified that that purpose is being achieved right now and there is no serious threat to its being

21 carried out in the foreseeable future. Moreover, Petitioner cannot show that any claimed

22 impossibility or impracticability will be effectively remedied by altering the Deed of Trust to permit

23 coeducation, nor, were any change needed, that permitting coeducation comes as close as possible to

24 the Nunn's intention as expressed in the Deed of Trust.

25 The evidence will show, instead, that Deep Springs College is thriving. The college is in the

26 best financial shape it has ever been in, having an endowment exceeding $20 million for the first

433854.1 -3- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 time in its history. (Ex. 2 [Spring 2014 Trustees' Meeting Packet]4 at 68.) As the Dean reported to

2 the trustees just last month,"the life of the mind flourishes at Deep Springs." (Id. at 35.) The

3 application pool is strong and deep and the school is thus able to be highly selective. (Id. at 40; Ex.

4 3 [Special Interrogatory Responses] at 2-5 (showing admission rates).) The school's students

5 transfer to first-rate institutions and do well there (see id. pp. 6-7 (showing transfer schools), Ex. 4

6 [2009 Alumni Academic Survey -Overview of Results] at 1 (showing vast majority of transferees

7 receive bachelor's and higher degrees), and they report a deep and abiding positive impact from

8 their time at Deep Springs (id. at 2(70% of alumni report that their Deep Springs Education was

9 "Fundamental" or "Very important" to their career and life). Moreover, Respondents' expert, Brian

10 Jones, testified that single-sex schools are not only legal, but favored in public policy.

11 Because Petitioner cannot show that it is impossible or impracticable to continue

12 ~ successfully operating Deep Springs as a single-sex college, the Court must deny his request to

13 change the purpose of the college under the cy pres doctrine.5

14 V. THIS COURT SHOULD NOT APPLY PROBATE CODE SECTION 15409 TO

15 DEFEAT NUNN'S INTENT TO CONTINUE A MEN'S COLLEGE.

16 Petitioner requests that the Court modify the stated purpose of the L.L. Nunn Trust under

17 ~ Probate Code section 15409. Subdivision (a) of that statute states:

18 On petition by a trustee or beneficiary, the court may modify the administrative or dispositive provisions of the trust ... if, owing to circumstances not known to the 19 settlar and not anticipated by the settlor, the continuation of the trust under its terms would defeat or substantially impair the accomplishment of the purposes of the 20 trust. In this case, if necessary to carry out the purposes of the trust, the court may 21 order the trustee to do acts that are not authorized or are forbidden by the trust instrument. 22

23 Section 15409 cannot be used to change the purpose of a trust. As indicated in the statute, a

24 trust's "purpose" is distinct from its administrative and dispositive provisions, which exist to carry

25 4 Excerpts of this exhibit are attached hereto. The entire exhibit will be introduced at trial. 26 5 The evidence will, in fact, show that a change to coeducation will hurt Deep Springs College. Both alumni and major institutional donors are likely to reconsider donating if the school becomes 27 coeducational.

433854, OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1' out that purpose. Section 15409 plainly provides only for changes to the "administrative or

2 diapositive provisions," and then only if such changes are "necessary to carry out the purposes of the

3 ~ trust." Modification of a trust's administrative or dispositive provisions is available only to

4 ~ effectuate the settlor's intent. (Rest.3d Trusts, § 66, cmt. a.) Moreover, as stated in section 15409,

5 ~ any such modification must be necessary to carry out the purpose of the trust.

6 Petitioner proposes to transform a statutory provision dedicated to ensuring the

7 accomplishment of a trust's purpose into a vehicle for altering or defeating that intended purpose.

8 His request to modify is in fact an attempt to supplant Nunn's intended purpose.6

~~ Consequently, while courts may apply section 15409 to modify the manner in which trustees

10 carry out a trust's purpose, the only means to change a trust's purpose is under the cy pres standard.

11 (Rest.2d Trusts, § 399; Rest.3d Trusts, § 67.) "In ordering a deviation the court does not touch the

12 question of the purpose or object of the trust, nor vary the class of beneficiaries, nor divert the fund

13 from the charitable purpose designated." (Craft v. Shroyer (Ohio Ct. App. 1947) 74 N.E.2d 589,

14 598.)

15 Although section 15409 may not be used to change the explicit purpose of a charitable trust,

16 ~ should the Court hold otherwise, its application would require afour-step process. (1) The Court

17 must determine the purpose of the Trust. (2) The Court must determine whether continuation of the

18 Trust according to its stated terms would defeat or substantially impair the accomplishment of that

19 purpose. (3) If so, then the Court must establish whether this substantial impairment is due to

20 circumstances that Nunn did not know and did not anticipate. (4) If so —but only if doing so is

21 necessary to carry out the Trust's purpose —the Court has the discretion to permit the Trustees to

22 admit women to Deep Springs College. As shown below, application of these steps leads to the

23 conclusion that the Deed of Trust may not be modified.

25 ° As the United States Supreme Court aptly noted: "`Modify,' in our view, connotes moderate change. It might be good English to say that the French Revolution `modified' the status of the 26 French nobility —but only because there is a figure of speech called understatement and a literary device known as sarcasm." (MCI Telecommunications Corp. v. America Tel. and Tel. Co. (1994) 27 512 U.S. 218, 228.) 28

433854.1 -5- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 A. The Purpose of the Deed of Trust Is Explicitly Stated.

2 Petitioner has asserted a wide array of supposed purposes of the Trust. This is wishful

3 thinking. The specific charitable purpose of the Trust is instead stated in detail in the Purpose

4 ~ Statement of the Deed of Trust, quoted above. (Ex. 1 at 87, ¶ 1 ("education of promising young

5 men ... in a manner emphasizing the need and opportunity for unselfish service ...").)

6 B. Continuation of the Trust Would Not Impair this Purpose.

7 The evidence, summarized above, will show Deep Springs College is successfully fulfilling

8 ~ the entirety of the purpose laid out in the Purpose Statement and is thriving in all relevant respects.

9 . It continues to attract excellent students and faculty; its finances are healthy and the college is

10' successful at fundraising; especially in light of its tiny size, it has an outstanding reputation; and it

11' continues to provide its students with a rigorous, fulfilling, and meaningful education that prepares

12 them for lives of service.

13 Petitioner cannot show that continuing the Trust under its stated terms will defeat or

14 ~ substantially impair its stated purpose.

15 C. Petitioner Cannot Establish that Nunn Neither Knew Nor Anticipated Changed

16 Circumstances that Now Defeat or Substantially Impair Accomplishment of the

17 Trust's Purpose.

18 Even if this Court determines that continuation of the Trust on its terms would defeat or

19 ~ substantially impair the accomplishment of its purpose, Petitioner cannot show that this purported

20 impairment is due to circumstances that Nunn neither knew of nor anticipated. Dr. Newell testified

21 that Nunn was "ahead of his time in being sensitive to issues of racism and religious bigotry and the

22 ~ like ...." Dr. Newell also testified that Nunn was educated by women, supported women's

23 education, and knew about single-sex and coeducational colleges. Deep Springs was started in an

24 era in which women were making strides in achieving parity with men, especially in the western

25 states. Moreover, Dr. Newell testified that a large quantity of Nunn's writings —which might have

26 shed additional light on Nunn's reasons for making Deep Springs single-sex —were destroyed

27 shortly after his death. In light of these facts, Petitioner will be unable to show that any impairment

433854. OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 in the accomplishment of the Trust's purpose is due to circumstances Nunn did not know and did

2 ~ not anticipate.

3 Moreover, another of Petitioner's experts, Roger Lehecka, testified that the changes that

4 purportedly justify a change in the Deed of Trust occurred rapidly in the 1970s. Dr. Newell, on the

5 ~ other hand, testified that to the present, with the exception of a few "tough years" in the 1970s and

6 ~ 1980s, the school has accomplished Nunn's purpose. Thus, Petitioner will not be able to show that

7 ~ circumstances that changed 40 years ago defeat or substantially impair the accomplishment of the

8 purpose of the Deed of Trust.

9 D. The Proposed Modification Is Not Necessary.

10 Even were this Court to find that Petitioner has met his burden with respect to the three

requirements above, the Court has discretion to modify the Trust's administrative or dispositive

12 provisions only if the modification proposed is necessary to rectify the alleged impairment of the

13 Trust's purpose. Probate Code section 15409 is a "traditional standard[]", not one in which "it is no

14 longer necessary ... to prove that either the trust or its beneficiaries would suffer dire consequences

15 in the absence ofjudicial intervention." (5 Scottand Ascher on Trusts (6th ed. 2011) § 33.4,

16 Termination or Modification on Account of Unanticipated Circumstances, 2186 & fn. 48.) Plainly,

17 because Deep Springs College is, as Dr. Newell testified, accomplishing Nunn's purposes

18 successfully today, no modification is necessary.

19 VI. THE COURT CANNOT APPLY COMMON LAW EQUITABLE DEVIATION TO

20 CHANGE THE PURPOSE OF THE DEED OF TRUST.

21 In addition to Probate Code section 15409, courts also have a common law power of

22 ~ equitable deviation, by which a court may modify a trust under "peculiar circumstances ...."

23 (Moxley, supra, 27 Cal.2d at p. 468.) This authority was circumscribed when the Legislature

24 revised the Probate Code in 1986 and adopted section 15409. The common law of trusts is no

25 ~ longer good law "to the extent that the common law rules governing trusts are modified by statute

26 ...." (Prob. Code, § 15002.) Plainly, section 15409 addresses when a trust may be modified due to

27 circumstances not known and not anticipated by the settlor, so common law equitable deviation does

433854. -7- OBJECTORS'/RESPONDENTS' TRIAL BR[EF 1 not apply to that situation. In any event, even were this Court to apply common law equitable

2~ ~ deviation, Petitioner still cannot meet the standard.

3 A. Common Law Equitable Deviation Does Not Apply to the Petition.

4 Petitioner seeks to invoke common law equitable deviation because, he alleges, "since 1923

5 there has been a significant change in the role of women in society and leadership roles." (Petition,

6 ~ ¶ 25.) This "significant change" falls squarely within the scope of Probate Code section 15409,

7 which addresses "circumstances not known to the settlor and not anticipated by the settlor." "Where

8,, the Legislature has `minutely described the limitations and exceptions dealing with a given subject

9 matter,' we may assume it intended to supplant any relevant common law." (Gapusan v. Jay (1998)

10 66 Ca1.App.4th 734, 741 (quoting In re Marriage ofPlescia (1997) 59 Ca1.App.4th 252, 261).)

11 Because section 15409 is explicit as to the findings necessary to modify a trust based on

12 circumstances not known to the settlor and not anticipated by the settlor, the common law of

13 equitable deviation cannot be applied to the alleged changed circumstances.

14 B. Common Law Equitable Deviation Applies Onlv in Exceptional Circumstances

15 and Where Necessary to Accomplish the Trust's Purpose.

16 Should the Court nevertheless find common law equitable deviation available here, that

17 ~ doctrine has been used only in "exceptional situations in which modification was decreed in order to

18 carry out, rather than to defeat, the primary purpose of the trustor as expressed in the trust

19 instrument." (Moxley, supra, 27 Ca1.2d at p. 468.) As stated in a heading in Ike v. Doolittle (1998)

20 ~ 61 Ca1.App.4th 51, 80, this power is only applicable "where necessary to accomplish the purposes

21 ofthe trustor(s) as expressed in the trust instrument."

22 The cases applying this doctrine illustrate these limitations. Adams v. Cook(1940) 15 Ca1.2d

23 ~ 352, 358 used this common law modification power "to change the method of administering a trust

24 estate" where it was "shown that such a change is necessary to prevent loss or destruction of the

25 trust property...." In Stanton v. Wells Fargo Bank and Union Trust Co. (1957) 150 Ca1.App.2d

26 763, 766, where a trust's administrative provisions limited the ways in which the trustees could

27 invest the corpus, although the beneficiaries sought to change the trust because there had been "a

28 change in economic conditions not anticipated by the settlor since the trust was executed, and that,

433854.1 _ g OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 should the restrictive investment provision be followed, such changed circumstances may

2 substantially impair the purposes of the trust," the court held that modification was not warranted.

3 "Certainly, it is true that misguided restrictions imposed by a settlor should not be permitted to

4 defeat his fundamental trust purpose, but it is equally true that the court should not try to guess what

5 economic conditions may be in a few years by permitting deviations when no real emergency exists

6 or is threatened." (Id. at p. 771.) In Estate of Traung(1962) 207 Cal.App.2d 818, 835, the court

7 determined that it was the testator's purpose to have the beneficiary receive his full share of the

8 corpus so long as~ it would be managed with proper care and judgment; the beneficiary's

incompetency was a change of circumstance clearly not anticipated by the testator, and the court

10 determined that, in the light of this change, compliance with the testator's directions that the

11 beneficiary give evidence of being capable of handling the trust should not be enforced.

12 Had Adams, Stanton ar Traung been decided today, the courts hearing the cases would have

13 ~ applied section 15409, not the now-inapplicable common law doctrine.

14 More recent cases, such as Ike v. Doolittle (1998) 61 Cal.App.4th 51, apply common law

15 equitable deviation to situations — in Ike, a drafting error in the trust instrument that rendered it

16 ambiguous —that fall outside the scope of Probate Code section 15409.

17 As discussed below, Petitioner will not be able to show the existence or threat of a "real

18 emergency" or any "exceptional" circumstances, hence modification should not be permitted.

19 C. Petitioner Does Not Meet The Requirements For The Court To Apply Its

20 Common Law Equitable Powers To Modify The Trust.

21 Here, only if Petitioner demonstrates that "peculiar" ar "exceptional" circumstances exist,

22 ~ which do not amount to changed circumstances that Nunn did not know of and did not anticipate,

23 then the Court may resort to its common law equitable power to modify the Trust where it is

24 "necessary to do so to accomplish the purpose of thetrustor(s) as expressed in the trust instrument."

25 (Ike, supra, 61 Ca1.App.4th at p. 80 (emphasis removed).)

26 This standard is as restrictive as section 15409 as it requires that the modification requested

27 ~ be necessary to effectuate the purpose of Nunn as expressed in the Deed of Trust. Petitioner has

28 alleged no peculiar or exceptional circumstances justifying a modification (aside from circumstances

433854,1 OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 he alleges were not known or anticipated by Nunn, and hence withdrawn from the scope of the

2 common law by the adoption of section 15409). Moreover, he cannot demonstrate that this

3 modification is necessary to accomplish the purpose of Nunn as expressed in the Deed of Trust; to

4 the contrary, the modification he seeks would frustrate that express purpose.

5 Petitioner asserts that this Court should apply its equitable powers to modify the Deed of

6 Trust in order to effectuate Nunn's alleged purpose of training leaders because "Radical Changes in

7 Society Necessitate a Modification of the Deed of Trust." (Petitioner's Memorandum of Points and

8 Authorities in Support of Petition, filed Feb. 6, 2012, at 17.) Indeed, Petitioner's argument under

"r'] this heading refers back to his arguments for application of section 15409. (Ibid.) Petitioner

10 merely repackages his section 15409 argument in the hope that the Court will apply broad equitable

11 powers to modify the Trust after Petitioner fails to satisfy the demanding four-step process required

12 by section 15409. Because common law equitable deviation does not apply here, Petitioner cannot

13 prevail on this theory.

14 However, if this Court decides that common law equitable deviation applies, Petitioner will

15 ~ not, given the facts discussed above, be able to demonstrate that peculiar or exceptional

16 circumstances —let alone a "real emergency" —exist and that admission of women to Deep Springs

17 College is necessary to effectuate the Nunn's purpose as expressed in the Deed of Trust.

18 VII. THE DEED OF TRUST MAY NOT BE MODIFIED UNDER SECTION 15403

19 BECAUSE THAT STATUTE DOES NOT APPLY TO CHARITABLE TRUSTS, NOT

20 ALL BENEFICIARIES CONSENT, AND THERE IS NO REASON OUTWEIGHING

21 THE INTEREST IN ITS ACCOMPLISHMENT.

22 Petitioner also seeks to modify the Deed of Trust under Probate Code section 15403, which

23 ~ provides that if all beneficiaries of a trust consent and petition a court, the court may modify the

24 trust unless it determines that the change defeats a material purpose of the trust, in which case the

25 ~ court has discretion to order the change only if the reason for the change outweighs the interest in

26 '~~ accomplishing the material purpose. Petitioner cannot succeed on this claim as a matter of law

27 because this provision does not apply to charitable trusts, but even if it did, Petitioner cannot show

28 either unanimous consent of(let alone a petition by) the beneficiaries; moreover, admission of

433854.1 -1~- OBJECTORS'/RESPONDENTS' TWAL BRIEF 1' women will defeat a material purpose of the Deed of Trust, and the reason to admit women does not

2 outweigh the interest in following Nunn's purpose as stated in the Deed of Trust.

3 A. This Court Should Not, As A Matter Of Law, Apply Section 15403.

4 As a matter of law, section 15403 cannot be applied to charitable trusts such as this one.

5 No California court has ever held that section 15403 applies to charitable trusts.

6 Nor was such application considered when the law was adopted. Before its 1986 enactment,

7 ~ the California Law Revision Commission ("CLRC") investigated the issue of trust modification and

8 termination by consent of all beneficiaries.(CLRC Recommendation Trust Law (1986) 18 Cal. L.

9 ~ Rev. Comm'n 565.) Strikingly, the CLRC's report contains no discussion of this provision's

10 ~ application to charitable trusts. While, unless excepted, all sections of the trust code apply to both

11 private and charitable trusts (Prob. Code, § 15004), the CLRC recognized that courts may "find a

12 ~ statute inapplicable to a charitable trust in appropriate circumstances." (18 CaL L. Rev. Comm'n at

13 p. 1306, fn. 412.) The difficulty —indeed incoherence — of obtaining meaningful consent of all

14 beneficiaries of a charitable trust exemplifies why this Court should not apply section 15403 in this

15 matter.$

16 The Restatement Third of Trusts section 65 is almost identical to Probate Code section

17 15403.9 Its comment g is thus instructive in interpreting the application of section 15403:

18 g. Material purpose and charitable trusts. Where a specific charitable purpose is designated in the terms of a trust, that designation reflects a material purpose of the 19 settlor under the rule of this Section, so that the specific charitable purpose cannot be changed or exchanged for a trust or other benefits serving a different charitable 20 purpose. (Compare, however, § 67 on the cy pres doctrine.) 21 Here, the specific charitable purpose is stated in the Purpose Statement of the Deed of Trust, and it

22 is to this purpose that the Deed of Trust refers nine times. This charitable purpose can only be

23 ~ Boys and Girls Club ofPetaluma v. Walsh (2008) 169 Ca1.App.4th 1049 did not decide that proposition, although it did apply section 15403 to a charitable trust: A case is not authority for a 24 proposition not considered. (Brown v. Superior Court(1982) 137 Ca1.App.3d 778, 782.) 25 g The Uniform Trust Code specifically limits modification by consent of all beneficiaries to noncharitable trusts. (See Uniform Trust Code, § 411 ["A noncharitable irrevocable trust may be 26 modified or terminated upon consent of the settlor and all beneficiaries ..."].) 2~ I9 Unlike the Restatement, however, California requires a petition to the court for the modification.

assssa.~ —11— OBJECTORS'/RESPONDENTS' TRIAL BRIEF 11 changed if the cy pres standard is met. Therefore, Petitioner cannot use Probate Code section 15403

2 to change the specific charitable purpose of the Deed of Trust.

B. Petitioner Fails to Meet the Requirements of Section 15403.

4 Notwithstanding that Probate Code section 15403 should not be used to modify a charitable

5 trust's purpose, Petitioner cannot meet the requirements of the statute should the Court choose to

6 apply it. Section 15403 requires athree-step process before a court may apply it to modify a trust.

7 First, all beneficiaries must consent and petition the court to modify the trust. Second, the court

8 must determine the material purposes) of the trust. Third, if the proposed modification would

frustrate a material purpose, the court may only modify the trust if the reason for modifying the trust

10 outweighs the interest in accomplishing the material purpose of the trust.

1. Not All Beneficiaries Consent.

12 Not all beneficiaries have consented to modification. Probate Code section 24 defines a

13 ~ "beneficiary" as "a person to whom a donative transfer of property is made or that person's

14 successor in interest ... [including] a person who has andpresent or future interest, vested or

15 contingent."(Id, subd.(c) (emphasis added).) In relation to charitable trusts, section 24 defines

16 "beneficiary" as "any person entitled to enforce the trust." (Prob. Code, § 24, subd. (d).)

17 a. The Attorney General's Consent Cannot Compel Modification.

18 In its November 13, 2013 ruling, this Court determined that the Attorney General was

19 ~ "intended as one of the beneficiaries required to sign the consent in cases involving charitable trusts

20 under Probate Code section 15403." (Ruling and Order, filed Nov. 13, 2013 ("11/13/13 Order") at

21 10:4-7.) Thus, while the Attorney's General's lack of either consent or petition to this Court

22 necessarily defeats the application of section 15403 here, her consent cannot compel modification if

23 any other beneficiary declines to both consent and petition.

433854.1 OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1' b. The Current and Admitted Students Must Also Consent.

2 The current and admitted'° students of Deep Springs have a special interest that entitles them

3 ~ to enforce the Trust. This Court found that the nine equitable factors relevant to the issues of

4 ~ standing and consent did "not rule out requiring consent of current students to modify the Trust."

5 ~ (11/13/13 Order at 15:6-7.) Indeed, the Court held "[t]hat the students may be within the class of

6 ~ special interest beneficiaries is evident even with a superficial glance at the factors." (11/13/13

7 ~ OrdeT at 14:11-13.) The three most relevant factors are addressed below, and lead inexorably to the

8 conclusion that each current and newly admitted student must consent and petition the Court as a

G] condition precedent to modification under section 15403. It is Petitioner's burden to prove

10 satisfaction of this condition by admissible evidence.

11 (i) Factor One: Is the Interest Current or Potential?

12 The current students' interest is current as opposed to potential as they are presently

13 ~ attending the school. The admitted students' interest is "current" as well because their interests will

14 have "vested"(by operation of their being offered admission) by the time of trial. Although it is a

15 future interest, the interest is vested, making it more than merely "potential."

16 (ii) Factor Eight: Direct Input on Trust Affairs.

17 Nunn intended that the current students have direct input into Trust affairs as he guaranteed

18 ~ them a seat at the Trustees' table. (Ex. 1 at 90-91.) The two student trustees' votes are not,

19 however, tethered to any vote of the student body. So while they are representatives of the student

20 body on the Board of Trustees, they are independent fiduciaries and their votes are their own. Nunn

21 demonstrably wished to give the students direct input on trust affairs in terms of decision-making

22 power and trust administration. However, this direct input could be inadequate by itself to protect

23 the students' interests as beneficiaries, for a student trustee could fail to represent them or could be

26 10 On or about April 1, 2014, Deep Springs offered admission to its class starting in July 2014, ensuring each new admittee his status as a person with a special interest, and thus as a beneficiary of 27 the Trust.

433854. -13- OBJECTORS'/RESPONDENTS' TRIAL BRIEF ousted. The legal protection of those interests as guaranteed in the Deed of Trust can only be

2 ~ realized by a petition to the Court by the students themselves.

3 (iii) Factor Nine: The Settlor's Intent.

4 The students currently in attendance at Deep Springs are the express beneficiaries under the

5 ~ Deed of Trust. Numbered paragraph five of the Deed of Trust states:

6 5. The students in attendance receiving the benefits of the educational work being conducted hereunder are the sole beneficiaries of this trust, constitute the Student 7 Body, and are considered as the beneficial owners of all the property at any time held by the said Trustees under the terms hereof, title and authority being vested 8 hereunder in said Trustees only because of the probability that most of said students L] will be and remain minors while they are such students, and to maintain and perpetuate the work of this trust free from the changes that would inevitably result 10 from the ever changing membership of the Student Body.

11 ~ (Ex. 1 at 90-91 ¶ 5.) The specific terms of the Deed of Trust demonstrate that these students are

12 ~ beneficiaries whose consent is required by section 15403. However, even if this Court were to find

13 ~ otherwise, paragraph five is clear evidence of the "intent of the settlor regarding the class's

14 beneficiary status[,]" the ninth factor found by the Court as relevant to determining whether the

15 students have a "special interest" in the enforcement of the trust. (11/13/13 Order at 13:5-6.)

16 The evidence will show that all current and admitted students at Deep Springs have not

17 consented to modify the Trust and have not petitioned the Court. Atmost, Petitioner will able to

18 show that at a recent vote of the current students on the question of"Deep Springs' continued

19 commitment to coeducation," consent was not unanimous as a "small handful" abstained. (Ex. 2

20 [Spring 2014 Trustees' Meeting Packet] at 15.) This straw poll falls far short of the statutory

21 requirement in section 15403 that all beneficiaries —included the current and admitted students —

22 consent to modifying the Deed of Trust.

23 2. Education of Promising Young Men Is a Material Purpose of the Trust.

24 The Purpose Statement contains the single and indivisible charitable purpose, a major aspect

25 ~ of which is education of promising young men. However, if this Court were to find that the Deed of

26 Trust has multiple purposes, the education of promising young men is one of those material

27 purposes. Even when dealing with a petition for modification by consent, the intention of the settlor

433854.1 -14- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 1 governs over the desires of the beneficiaries. (See Rest.3d Trusts § 65, Reporter's note on cmt. a.

2 (citing Speth v. Speth (N.J. Super. Ct. Ch. Div. 1950) 74 A.2d 344, 350).)

3 3. There Are No Reasons to Modify the Trust that Outweigh the

4 Accomplishment of a Material Purpose of the Trust.

5 Clearly, the proposed modification to permit coeducation at.Deep Springs College would

6 frustrate Nunn's purpose to continue a men's college. The college is thriving and highly successful.

7 Petitioner's expert, Dr. Newell, sees no end in sight for this record of success. Thus, Petitioner will

8 not be able to show any reason for a change that outweighs the interest in continuing Deep Springs

9 as a men's college as Nunn prescribed in the Deed of Trust.

10 VIII. CONCLUSION.

11 For the foregoing reasons, Respondents submit that evidence will show that no change to the

12 Deed of Trust is warranted under any theory posited by Petitioner.

13 DATED: Apri14, 2014 BROWNE GEORGE ROSS LLP Eric M. George 14 Ira Bibbero 15 ORRICK, HERRINGTON & SUTCLIFFE LLP 16

17 HEA 18 :~ 19 Ira Bibbero ~" Attorneys for Kinch Hoekstra, Edward Keonjian, 20 Trustees of the L.L. Nunn Trust 21

a33ssa.i -15- OBJECTORS'/RESPONDENTS' TRIAL BRIEF 11 EXHIBIT INDEX

2 Exhibit Document 3 1. Deed of Trust 4 2. Trustees of Deep Springs College —Spring 2014 Meeting [excerpts] 5 3. Petitioner David Hitz, Acting on Behalf of the Board of Trustees of the L.L. Nunn 6 Trust's Response to Second Set of Special Interrogatories Propounded by Respondents 7 Objectors/Respondents Kinch Hoekstra and Ed Keonjian, Trustees of the L.L. Nunn Trust 8

4. Deep Springs College — 2009 Alumni Academic Survey —Overview of Results 9 5. Craft v. Shroyer (Ohio Ct. App. 1947) 74 N.E.2d 589 10

6. Restatement(Second) of Trusts § 399 (1959)[excerpts] 11

7. Restatement (Third) of Trusts § 65 (2003)[excerpts] 12

13 8. Restatement (Third) of Trusts § 66(2003) [excerpts]

14 9. Restatement (Third) of Trusts § 67(2003) [excerpts]

15 10. Uniform Trust Code § 411 (2000)

16 11. 5 Scott and Ascher on Trusts (6th ed. 2011)[excerpts] 17

433S 54. L -16- OBJECTORS'/RESPONDENTS' TRIAL BRIEF

~H's~L' OF TRUST' ~, ~ !~

3'HIS INI~IdTUr~,', me de this ,•day. of `

n.D. 1923, U7, LUC IEId L. 11UIJPJ .who ie e•lso sorie time s

deeignnted os L. i. ilUlhl~ e bochelor of 17eep Springs in Ingo i County in the Stute~ of Colifoi^nia, Grnntor, and PAUL 1J.. 1JtT1J1J, ,nor ~—

of Ln Jolln, Cn.liforiiia, ~iILLIAbi L. l~II'_HSAC![, tior~ of Provo, Utslt,

_Rti~5"T n.. ~fii0`ti~~lIJ~u,. nosy of De9p Spt~in~c~, Cslifornin, OTTO ki.. 51JHP.,

now of Loa nngeles, California, PRAlJCIS C. NOUN, noN of Lqa f. Angele s, Cal iiornie, CAi?BULL 1J, '~iHIT~[nl~, nu~r of !tocheater, l~ew

Yo:!c, Pa.Ui: 1'. C~~~rJHN,.noy of L~rkeleY, Cslifornia, and,1!.~ROLL R.

~IP,LDJ, norr of:~Selt Lake City,; Utah, grantees; I~ITiJESSGTH, TNA^t

',~ii~'i~r;.~S i;r:~at,o~~ k~us I~~,r~tot'~rc ast.~_hli~hec~ on.:educa-

tional inatitut,ion of 7::ap. S~rin~ s in In yo Cowlty, Colifornla, and Iles Uaen there c~rryiri~; ou nd~icetional vrork for the education and develonm~)~t of ~ oronising ,young men; rand

's~;Lr'RF.HS ~;r~ntol, d~si.rin~; to provide t'or the develop- rant and n~rpetuntion of such educational norlc, hn4 heretoYor~ conveyed the~.propert.y.hereinatt~r described to ,the al~ov9 , namad grantoes b~y~a• cor~ain ~nstrume,nt• in•~vriting d$~tsQ:higy. 15, 1923 and duly e:cecuted and dalivared. Uy~gran~~or, end; now de;Tres to supploro::nt and conPii~m'sa.id conveyance detc.d iday 15, 1923, by the execution ar~~ delivery.,~of, Lhi~ ;nnveyatiee rihich more pe~ticularly definas bu~ti cortain. of the property conveyed and the terms and , cond f t Ions, of the trust u?on ti~h icll Oren for desires . tlia t.• the •

Pr000rt~~ bonve~~ed;'L,✓• IZi,n to s31d ;;ra:~`,ees~ shn11 U•~ !~~1~ and:•u~ed;

,. ~;:i~0';I, 'i:lL:~_~C~~.L; 1n conaidei~~tion oL' ttio premises end for use es ti~r~:inoftsr sit, forth,-grantor does hereby ~;ive~ grant, bergein, sell end convey unto tho said. Trnntees, ar.rl .their succe::r;~;•;

2nd ossign3 forever, el). and ~in~ular.: the follo~+iii ; desct~ibed property, to-~11t:

All of the reel estate ottd hater rin,hts, buildings, ltbrarSes, f,u~nittu•e, vzhicles, £nrmtn~ impler,:~r.ta, machiner;~ and equ]pn:;nt, cattle, horses, poultry, end „ . ,-gt~igr;~l,ivostock of every lclnd, brands, and ot'ncr reel, .~ one p~•rsor~al pronart',+ ~f evc~r~~ kind nr~J d3scrintion ~,t•~ •no;v oyiied oi• ctet~n~d by ~;r~ntor end ~itiiat~Cl ill Inyo Counter, C~.iLPos~nio, nnrticularly incluc:ing he rejn the property Bare inaf t,r spa c iS 1ca 111' de acribad but riot by, such specific c?escription of any property hereby limit- 1ng in any wA.y the ~~nerallty of the Soregoing, to-aiL:

1. The trac►,s of land in Inyo County, C~li:ornie, described as follows:

(a) 'Plie south hn11' of t!:C ;,outhriest c~~iHrter (~'r 5.i) of sec- ~ tion tl►irty-s1x (~G) in to~vnship six (6) south oP range thirt~f-slx (~G) ~nst of LVie ;.1ouiit C,iahlo imse and 1.ieridlon.

(`~) Lo Ls thr•e~ (:~) and four (4), t}ie coutli h~.lf of the nort.h- west ~uertrr (S~~ ld~~~-~),, end the west half of the southnest ~uart~r (l~:~r Stid~,) of section one (1 J ; the 3outhea st nuarter oP tl~o nort}4a~~t r~ur_rtsr (SF:i 1JE;,), the coutn~ast au~~rt~r (;:^;-), nn~i the cost iinli vi' the soi.iLhwes~ nuarter ~E~~ J~Iq oC ~~ct'~~3n t.r~ (2); tt~e ~ioz•~hc:ust quarter oC t;ie nurLi~~~est c,~z~rt~~r (lli~t il~i=,) 01' section eL-hteezi (18); the east hn7.i of t`ia sauth~~~est ci unrter (e:.rti 5,~° 4)~ , t►ie we a t half of the southeost quarter {;y~ ;,~;~~, and the aouthe~~L ~uorter o: th3 yp~lth~9^.t ~~w~r`,~r (SC:.; s~ ) of a~Ct~OYI tk~irty-tr,o (~°2); 8!1C t.l?:'. SO'li.t:li"G~ ~"IGI'~J:Z' Ol i.~ic. ~011~tlilB9t. ~~L:11``.P.I' ~ 5~l v..., vi sactiot~ ti:!rty-t!~~ree (3;5) a.11 in to~,ynahl~ se van (7) south of rnri;_;e tip lrt~~-six (36) east of tlti~ l.lount Diablo I~eae ~r~d 1•~•.:ric;i~n.

(c) .'.Che .east lielf of t>>e northwest nur+rter (C~ N.~~-) of section t.venty-lour (2~) in ~ounship se~~en (7) south of rtin~e Lhirty-live (35) ec.^.t of the ;:fount laieblo 6~se end I%,eridion.

(d) The southwest quarter of the north~~est qunrt~r (SI~~ Idn~i), the southriest quarter of the northeast qunrtcsr (S.Y~ tTLa 3, and the southeeyt ~uorter (SC ) of section foul (4~; the southvrest quarter of the southwest nuerter (54~~ 51Y{) of section three (3); and the west lielf of t11e northeast quartor (Y!} NE ~, the northxest quarter of the southeast quarter (NtY; SE,, ), the east hnlf of the southwest quart-:r (C~ 5erl), and tiie southnest cuart~r of the souLhweat quarter (SW; S1'f~) oP section (9) ell in township eight (8) eouth of range thirty-eix (36) east of Fdount Diablo Re se end IAerl~lan.

Sub„1ect, hov~ever~ to the rights of grey over fife south- tiiest r~unrt~r of the northi~est quarter (ST,:; tP~l-,L,) of section four (4) in tor~nship eight (t3) houth of range thirty six (36) east of 1.lount Liablo Ha 3e and i.ieridian reserved Uy file Lnyo Chemical Company in ita deed• to ~;rant,or dntec+ ,1pri1 5, 1922 and rocurded July G, 1922 in tli~ niflce oA t1~c County Recorder o~'.,Ziiyo Co:uity, Celii ornie, i:i 13oolc 37 of Leads et pace 315, to which record reference is hereby made.

2. All woter rights and othor rights and choaeA in octiot~ oP every Itir_c cni~veyed to ,:rnntor by deed from ~11fi•oc'. Hruce

Simmons .la tad ;1A~~i1 19, 1914 and recorded npril 20, 1317 in the office oi' the Cotint;l Recorder of Ingo County, Csl.lfornia, in

T -.,~ 'S.r s 1Y. dated ~~-'~~`• goo:# 36 oP Reds at page 409; by deed Prom '~tiilinm Bird of se id _ `" b'ebruery 23, 1918 n~id recorded March 4, 1914 in the office

Coubty Recorder in Book 31 of Deeds et page 480; end by~deed Prom

I7nyo Cllsmical Company dated April 9, 1922 and recorded July 6,

1 22 in the offica~oY paid County Recorder in Book 37 of Deede at

page 315, to all of Which records reference is hereDp made. A1Bo, ...... all ~+ater rights Which have accrued to grantor under License X17'7 ''

issued by the Division of :later Rights of the Department of Public

'Norka of the State of California wider date oP February 28~ 1923

and of re~c~rd Lz it9 oifice~ to whioh rAeord ref~~ronce is hereby ~

Together with all and singular the tenements, hereditements~

ot7d appurtenen~e3 b~lon~ing or in an~rise onpertaining to any of

t.)io above cla~cribod property, ftnd tb~ recer~ion and reversions, '~

remainder end ~oir~sindars, i'•3T1L::, i~o~~anues, income, issue, and '~ profits .thereof. t,, . ,. ~ - .. _ , . EXC6PTTidG ;1ND R~56RVI1JG to graiztor, ho~vevc~r, a12 of t?Ze

furniture booko, pictures, anti othor personal property contained

in the two rooms in the quarters building at said Deep Springs

whioh have he retolor~ been occupied by grantor as hie bedroom and

office _and ~n tlr~ front or storeroom of t`A nap bt~ildin~ a t said

Deep Sprin~a commonly called the storehouse or museum vrhich is

situat3d bct~~~eon ~Bld q4^.~t9ra b.tilding encl t~1e garage at said

Deep Sprinb•~; Lo~~ther with th9 nigh+, to occupy and uee said two

rooms in said quarters building anQ the bathroom appurtenant ~ ~ thereto en3 said s~or~rooM 1» ~oi3 ato.ol:ou3e ou?ldlr_;; ao Long as

~rnntor ir~y live end may du sire 'o so occupy oi• u::9 snid rooms.

TO NAVC i,;~"ll TO FOLD 911 ~Il(~ singular the abo~;e m~ntionod

end do scribed property, to3~ther with its ~ppurten9nces, unto attd s~si~ns forevai, but the said gro.nt~_-, ~~.nd their ~~°~cessors ... the nev~rthaless, to be :i~ld, v.~ad, a~~a aisoo.~ea of by in.,. trust, puxsuanca of the said grantees And their successors s~pointed in besn~ tarms~:~ereof ,~eaic~. ~,rnnteos ;nd ~thelr paid srcceaaors

(3) ~^ ~~ :«~

` ?. u~l~~inai'i~::r Calked ~triietcas),~ Pur the purpose, siith the .por+era~ ;~~ ~- ~' `.~ a.~~i` upoZ the 'terms ~ dnd conditions tiei~e ~na~ter ~rtiore J~ully se~t~ • Porth, to-wit; .~ :.. • ,.;~ ,.- _ r•~. - is ~~ '•J i'~.:~. 1~. The ~~purpose for nhfoh the pro~arty hereby ~corivayed

and 'tri'o" ~rerits~, iticotna, prof its',' ari~d l'~p roceeda t~iersof~ , ~ ~ shell~ ` Abe'.

used b:V Auld truste9~s~~~is "to pruv~id~ for "and" csrr9 on e~?uca'tTonal

worn in ~tlis State of~ Cu2~i1'orni'a s1r~illa'r to e~rid in 'deve7.opmerit of

ttie ~noi~)t alre~ily~ ineiigurat~d~~liy grantor at Deap Springs in Ingo

County, G'a1iPo~rnla, ~Uut ~iri' :;u~:l~ ~rieiivai 'arid f~orui and at Ssucri`p1aCe

or~pl:+ces nit.hln ~aici'sta ;~ n3 anld ;xi:st,ec:s i~ goud cori3oi~rice

and th~3 ~zei~c~i~o~ oP th~~'r~ Lest' Ji:~grcoiit ruiy de tdrniin~,~'Poz' tih'~

e`ducetion"of'prom'is~nB~ 9o~ing mdn, aeYcct~d~~b`y`sa~d'truefe~os'or vs

ttieq mad p:-sscribe,~~ in u~ mynnar ~:h~Ilas3zing tli~ heed and oppor-

ttmity fol uns<~2fish'sorv~.c~ `in uplift7.hg inenkin~~ ~rofn r~at~rieli~sm

to idaelism,, to~a life iri harritony ~ith'the 'G~rreAtior,"~in'th~' conduct

oP-~nhich~edu'cat~onal w'orl~ demucratio se1P ~ovorrvnent b'y the'atudents

tl:a~neelvas shall be e'fe~eture'as is ndn the cash "at ea id Deep

Spr~rlgs,"and which Nork aheTl be carried on riot for profit but

solaly'~or ~tlie advericement of .thepurpose he reinabove mentioned.

2. In ordor 'to ensble t~iefn to'adaomplieh 'the purpdae of this' trust in such mariner ns they~in the exercise ~ofth'air best

~u~gment may deem most fitting and expedient, the en id f.rusteae

are+ h~raby authorized and' emno~r~rad to ~ect in ttie matLzr end deal

Aith ins and sll property novr or hog ~a ter held by them he reundar,

(ea id property so held he reunder'st any gfven time being herain-

nft`;: ~r^f^rr_.c'_ Lo' o~ the trust e:+tste); as they ir. r;ood `canseience

anil •the 6::6rciss of"t,r_e`i4~ boot ~~ud~ment' mad deon► proper ~arid ~adbls-

able; en~'they are herobq ~gfveri grid granted full power 'end 'authority. (~.J T~ hold, s~:ll, conv~•y, l~ese, surdivide, ol~dgo,

mort~nga, dncwnbvr~' invest, r~i.nveflt~ loeii, reloan, and in any end

all othar respects handle, rarag~, opere~^, and dispose of ell or

any ~porf,ion oP se id truot eat9te '_n oucr manner, 1'or such ~consider-

i'4) 'e ti on, end upon such' terms nrid conditlons`ee'aaid" trU~at,eee may ~ i

deem most ad vieaUYe~ 'end all ►+itliout the intervention of any

court oz' aay limite~tiori or` rbsti^iction~on~`the' discreti'on~ bf`"

~sat'd ~tru~tees es 'to ~t'h9~'kind or'•cl'g9~ oP ~propert~ ~iH' ~}iicti ~t~e

pt~ooeeds of o4~ 71ioo~ne" Prom ~sntd triiet `eeta~te 'may tie ~rellr~~~s#:ed, ~

sric]' vithout' obliE~tTon ofif the part 'of ori9'purctiaser oP'all ~or~ ~,; t~ `nny pert' of tho~ tiirust e~tnLo' t'o sea t.o the opplicu'tion' of zany of r

tiie purdhnse r~aney `oa~id~therefor; ., ". '~ ~ '' ,' I

~(U)l To'~tra'nsfar ~iid turn Cvet►,'t~ithout"re de i'virig'p~cuniery

'ccneidbration tharsfor,' ull of ~tha t•?•.ist' este.ta" held hareuiider to ~~ pn"eQucntionnl coi•porati~on, iu:incorperated association, or other `_ P,~ lilac organization~~devo~ted to the 'ceuee oY education, wliettier formed

by se id 'triisiees or Lheri es2r.tin;,, ahene~-3r ~u to do ei11 in the

`jud~~nenti''oS"o;itd~ ~ru~~tees beet mf~iht.-in and ~cerr~j out the purpose .~

M . .'~. hcrciri '~~et worth, pravidad that under no circumetarrce shall ariy oP

~tHe ~iru§~ 'este'tb ~b~ "so'`treli~Pcrrod' or }turned aver '~b niiy such'

org~niza tion'f ormed or opi~ra ted for privn te' gaiu, or for' use

other~:3.se than" in 'the a6complishment of the' purpose of this trust;

end, upon 'such trsnsSer of~ osid"trust estete~ tfie grantee or ~~

3i^cinteAs"" theroof`'sCia1T b~ substituted for trig eaid~'tru~ateea and`

shill be'!;~al>.fact•"~to~ell their duties and'r3snoneibilities ho re under

andvested with all their riQhta and po~rere aub~ect~ howAver, to

such additional ..o~lditions e,i~ 1L•~~it~~ I,ian~ as mr,y to imposed by - ~ ~ gBSS Vruotes~~ ..

~'' (c)'' Ttr'pay'out oP the trust estate' end'the prooeeds''there- ~ .., frou~ X11 of~ ~fio n~c.~se~ry n~;~7 rroper e.,p~nse vi sccorr.~lishing the

pu:_•poss o_ ~liis''t,~iat ':Siid of Yro~s:;tin~~i~.zd ~i~~sorving tl~~ trust

estate acid; ih flint coni~oetion, to expend the corpus of the trust

PstaL9, ns ~,~~].1 Fps thn~:.+icom~ th~reirum i~, and to si••~h' e~;tant~~s,

t;:;;~'may d~ •:~::~ '~t ~x_ 9didnt and ^d~risable ~o to do, and' they me~~;

olso, i•nse~~~.~ i..c~~~N and i~z•~.et tlio' s•~.~,s' as part. ot~ t►~a trust

estate vrhene'ver the'y~ma.~ de'~m such action t'o be t'o t,ne beet

(5) lhit~res+ of the tru9t estate and Ll~e hatter eccompits!tment of the Y

purpose .oF this trust;

(d) To hold ~:~eetln~s in conforralty to the renuirei~ents ~

he reinaft,er set Corth, end t.o appoint, deSine t!i~ ~o~vers end

du~las of, control o~id discharge such corm;ittees of ita mer,;bers,

officers, and a6ants, inclucin~ n cltairmni~, secreter~~, ann treas-

5 urer, and stiwh subot•c~lnate ei»pluye:: - as theq may deem neces:.~er~ •

or cor,•ae,ti~nt., ~n~ t,~1ey m.~y co le~nti~_ sucl-i no:rers v;itli i~nf~rence

to soic:~ trust eetete end the cnrryin~ out of this tritict to aril

sect► con~.iittee, officer, or c+~ent e~~oln~•~c) b•~ them e;, they meal

(e) T~ r:cic~~t and clzougr. c Marie in ~,~iich the business of

this t.ru:;t may be tr ~io~ct~ad; and f:•on ~i,ca to tit~c !.o ~~cice end _

alter suc'.i a:•r»~i~;~n',~nl,~-, on~i ~cio~;t, r~:pec~, a~;c atren~ such by-laws,

r:tlea, ead ra~~~lntion~ s~ t.o t.1ie si~;n~tur~ of cla~ads, trnnsfars,

agreements, checica, receipts, and other ~vriting:,~ end ~o~a tosuch

o~;~ter matters es riay secure tl~a safe aril conven{c~:t- ;.rr.nsact?cn

of the fir,enaiel o~t~ o~har bii~i.~esa of t}~is trust;

(t) 'io rec:eive, tiulc?, and use in pursi:snce of the t?rm~

11~reof, any and all otliar property tt:at ,rqy be vested in ti~~m b;~

dead or b~ will cr other~^isa to b~ devoted to the prtmar9 object of this trust; and

(g) G~norall~, to do all such thlii,:,s and hen.~.~e acid

disposs of the tri:st estate held her~iuider es they m~f deem,

necessory arcs appropriate for the ucc~iuplislvnent of t.l:e purpose of this trust,.

c. •.;hnncv~r .:ny o[ saki tru~`.oas shall di:, r~s:,n, or

becoi~ unebls, refuse, ar frail to act l~ere~uidcr after reo~onable

op,ortunity is afforded him so to do, all of tai; r'_~hts, po„er~~

and dutl^s t::r~~inder shall for•th~a'.th cause srd d~; ~arinino enc~ t.~ro-

thlyds of tt.~ r„rieinc]er of said trustee, r::gNrdlEss of ho~v

ma►iy tint uiny be, mny appoint a suitcblc parson es h1s successor. _. A - ~. e.~~ .. ~ i .. ..

Such appolrt'nr~nt s!inll ho mode ~y an lnstz'wsent in tivrlting` sipied

• and ec4mowledged by said tyro-thirds' of 'said rerntiinder df sa'id ~~

trustees end~by the person so` appbinted,~ end recOriieil''in~~the" bffice r rc :, Por -the recording of d,eds 'iri the' `county vihersin the ~pririaipel-pert

of the educet~onel ~orlc provided'~'or fieroundeY~ is`ri8ing carried on

orid~ in eecli-other co~u~tiy rihei~ein'2~oi,1'~e~tot~ formin~'a ~per~~ of the

trust, ostets~ i~~sitnattd; ~nnd, ~ tlieroupon, 'suc~i siir,eos~nr ~s0 eppoint-

~a eheri ' suo~~ea to ana be' vest6d'viith s11 trie'riRht9; privileges,

powers, urid ~diitToo tie're~;ndc:r oP tho` trustso nhu Iios dlecl; resigned,

~~ aecor~ un5bl~e; rei~x~ed, oi~' Piled Lo ocG !:i:reui~Ccr~nfter renson-

nble brportunity ~affor~iii~ hirri~~so'to~uo. 7n tine event two=thirds of

3e'id rc'ne'inder'~o~' ;i;~1d'trusf~as r'e~'+ise' ox• Yail ~,+~thirt n reesonst~l~.

tlire to ~o aono~rit cuc~ a successor; he mny 1.:; apnoliitcr. 'with the

spn~~ o~'f~ct b'y order of nii7'court~ot' competie!it`1~'•'isdteLion upon

the appl'iCetion of anyone of the aAid rernnindPr oP snid trustees

yr 'o •any otH•ar party n'~tho:iced ~by lan to meld Such epplica't'ton.

4. 'lhe~•se'id tr~ist~?'s ~liell receive no compensation for

Chair' porso~ial services ~ps ~fiducinries ~1~ere'undor, buL tl~e~y may

employ ony"of ttie3r nwnbor n3 e~n offTcer~ agant,~ or ~iriployee"tor

eily purpose ~r}nlssible lie reunrl~r; and' s11oN hin'ree~onr:ble com-

r~~nsot'ion out of the trust ostate for services ns' such which ai~e exc'esa ~n of hip rluti.es as fiducinr;,~ 1~sreunder. Ito bond or ether security 1'or the fnitltt'ul >>arCorr~~ence of his deity shall be required of any of a~sid ti~i,ates3 except in pursuance o.f action At a trustees'

Heating, aitd none off' said truotees sha.Ll be tiol.d~ p~ 3ona11~,~ respon-

aiblz oii ~n7 ~~cco~_nt uv .•e;~::~~.oP l~:s Gain.; n~;~c~t~o lie7~auncler

so~ Iong~ ns~he shhl]; apt itr ;•'rod fniLh: ~ ~ ~~ ~'

5. The• st1~d'ents in nttsndence~ receiving tl~e benefits i.he• of edn,ce;.tonnl cr~rk he~,iG ~c~onPer,ted her~und:::; aro ~l~e ~so2e

Ue.r~eficin,~:os of this trust., con~LiLute' 1,he Stud9iit Bocci, and are

to be consi.darad n~ tLo L-_r,c~4cie1 o;rners of all she proPert;/ nt

any time held l,a the said trv.steo:~ under tl•~e terr.!o iloroof., title

(7)

3` and nuLhorlty being v~9ted hereunder in acid trustees only b~cnusa

oP ttis probnvility tti: t r~o:it of en id stuuantu tivill t7e nnci remain

minors while tli~y are ::uclz students, and to rneintain end perpetuate

the v~ork of this trust free from the changes tt;et ~~~ould inevitably

result from the ever chengin~ membership of the Stuaant boby. There-

fore, it stte1l be tlia duty o~ said trustees to accord the Student

P,o~iy the full right, poi~er, oncl authority of democrotic se1P- .. - ~ govern~~ient in occorde;ic~ c+itl~ its ti~editiott❑ and the i~enls and ,;' Policios of ~^eo a,prin~s cdu~:ntionnl institution yet forth in the

correspondence And docum_nts of ~rnntor nrici ox ttie institution

inclu~in~ t,l;e control or' t.:: concoct o' itn r.,e~nbers anc: of the ~

builc'Sn~s nsPd as stucitT~ts Jormitor].es nnri the po~•~~r by ma3ority

vote to veto the uismissnl oT any member during-, the school ;/ear but

❑ot the r~or~er ~.o c~i.smi'~ ~~~;~ r~^r.:1`er. 7.t cl~.~'•.i n? so he ttic duty of

said truatc~:s to ;~no~nir„ the right of the 5tudsnt E~ouy to maintain

il,s orgnnizatton end Bold its u;oetin~n w~dcr such ,i ules and regulu- ~'

tions es it rnny odo~t and nli,h no one present but lte ov+n mainb~rs

oxcept on its inv{totion: to a~certein, con:;:dsr, anc eonul~i ~ritlz,

so fer as 1n food conscience t1~ey ccn so comply.r~ith, thz des±res

pC seid Student Uocy; and to accord it full opportunity to me:ce its

v~i~hes tmorrn to them. To this end, the Studettt 5ody sha11 he en-

titled Lo,an~oint one o!' its rn2irber~ to act as the Stude~1t k3ociy

Representative of ell Lrustees' meetings, r,n~: it rr,ny~ remove at ti~,ill

any neraon so :~p~oint~d; sitcli ~~ppulntroent or removal to tike effect upon the fili~~, of n proper cPrtil'icnte i +~rith the secretor~l oi' the trustees. Gecti porson so appointed shall continue as the Student

Fiody..Ropreso►~tn,t.ive unt.i;l z•onov3~ cr, untll,ti~- ~.~,rp!rntton of ht~

t.e'rn of oP dice o r.• m~~,-~, Ue i i::~~~' by t1~e Stltda~it B~~dy even though i1e

may after, his epoointai~nt con~o to rye a rnomUer of the Student Eo~i~;.

'Phe Student riody 1~epresentntive, dtu~2n~ tiffs continuance in offla~, shall.hr, cntitlz.i to no~lce of,r.r~d to nttenu,nll t~•u~tees' meet;•,::

r,tth full ~or+er 4o speak t.;i~r~~ly anc: to pre;,ent hip v]er~s ano tkoso of

jyrfrrrr- ~rU - - - Reid Student Body on ell mat+.ern connect,c+d wit1: the cerryin~ out

of this tr~.t3t the soma ~a !: he Vas msc;e ono cf seid trttstees by

virtue oP this deed, t~nri to r vote, rr►~+cli ;,ha21 be cor.sldered and

countod os if he v,ere one of said trustees, on oll matters acted

upon at any trustees' i~s:etin~ except on mutters involving; the

conveyance or tr snafer oP nii~ title to, or t!-~e imposition of any

1+-n v.r~on, any of the ?~~onzri,y fox~min~ n nart of the trust estate, ~_

hut, apt i~teludin~, as ~ transfer of title w;thin the r•~eening oP

t1~is e:~eeption Lt:e ax n.;n~it•rse of r..ore~; in the conduct of educa-

tior.ol ~••>rl; lic~•en.~dEr or in tine protection or preservation of the

trust es~~te.

S. _:sce~Y. as uL•herr.l~e ~,::r•r~:,sl:~ provided for herein, the

povrera It^ret3 v~otFd in t.h: sa :d trustees shall only be exercised -

~)~ O?' ~Y~1'.F' t.~L•? 00!19::[?~ Of L11 J~ .^f:~.C', ~l^'.'.SL3_6 UI` 1:1 ]J11?'SlL8T1C2 Ol'

oct.ion nt r. i-~~st!.n~; o~ sr.'.•j t=•~i~•tess held In corL+'crmity ~•r1t11 tl;e

re~airements hereof, V~hen such action is approved by the vote o°

;iot less than fi~r~ cf tl~os~; entitled Lo ~~ote thr_r~Con ns specified

heroin. 1'ru:,teF~' nset,in~,:: mad; Le he 1.c of any time upon GP~~ ce'.]

of t~.~e cl:airmnn r~l~~olnt~c? by saic trust~~os or of any t'~re~ of s~;'

trtiatees earl at the place ~~hr;re the principal part of trio aduco- ~

tioral worlt provided for I:~r~under .s beini=, car,ied on, or at, Loy

;.n~eles, Californle, or at such other pinc~; o~ inay b= e~5re-~d upon

by all those anti t~~d to otten~ suoh mee tln~, tut e t lent one

trustees' r~~:3t1~~~ shall be ~eelc' Inch ~aor, r+h11e sc11oo1 '~~01~1: is

!n nrogre~s, at L~~r:p Sprinl;s, so .lonz e~ tha prf.ucipol part of

Lhe educational 'rrorl: provi~io~~ f~>r lie reunuer is baing corri~d on '

t1~er^, and th.,rcaft'r :,Ir~r::a~.~ t.t„ ~rinc:.p~J ~arG oC o: is d

tionai r~ork is baing condnct.cr~. ,.rattan uoti~e stating t~~e t~in~

and the pinc~ or eecli tr~ist~c s' ~m~e t;~l;- ~!~a' 1 b~ ;,iven to Inc):

p~rso~i ~nLitled to ~ttand ~hc ~~r,.~, •.+t!,~r ~>ersunelly or b,y r~nil-

in;; l•.~n a copy ~.1,•.:r~,o: ei lals last '~:noyrn post-ofSicc nccil~c~~,

anri :such nutice ii~ust L'~ to pres~~it~d or ~a~ilcd ;,o tech such person

('d )

//1 ....ty,~~. ` ......

et least thlrty~da~s,.before the date of ouch meeting, but any person

entitled thereto may waive such notice by a tivriting to that effect

ei~ned either before or after such meeting ar by attendance et ouch

m~eting.v~ithout objection Lhereto on the ground of lack of notice.

Tho notice required hereunder shall` b6 g#veh~by ~th'e ~eecretary ap-

polnted`by acid'trustees or bq their chairman or any three trustees,

end the~oortificatg=oP~eaid~secretary es to any action taken et any

trustees' meeting or ee- to any other fact concerning the same or es

to the call and notice thereof .sha11~ be prime,Pecie;,avidence oP the

fect9 the!v31n set Porth. The said trustees and said Student Body

Rep rasentative"shall he - entitl?d Lo raimburs~ment out of the trust

estat.a for all thou rPc~onabZa end necessary expenses 1.n ettend-

inF any ~trustoes' maet.i.n~.

IN ~7~ITI~JJ ~~'FLR,Or' ~rentor nes sst his hand sad seal to

these presents, end the said grantees, to evldezce their aoceptence

he reoP, have like~Niae~eaeouted this instrument, ell on the day and year first above •+vritten.

AL) uVitness to sigaetui^e oP Lucien L.: Nunn Grantor.

~' !~ ~f /mil ~tk ~L„ ~~IiLr~-~jG►~li~fi✓

`._ ~4.5~~' c. ~ ~ ~d~bEAL) :'Jitnrsa`to signatur.~ of Paul hf. tlunn ,~' .. ~ ~. i ' . (.~Y~t~i Q.~..._.%.~.~.w.

tr . L%~L^G~.~G~cC' i~v AL .~'i tne;,s to signature of ~Nllli~m L. rze~~,P~p ~ C

7 ~~, -''. _. ,- .9'i' :1~ .4`.....~_/-.; ,.~~. ate`...~~i, i.: i~ 4 - -

y..~~ ,, ,~ e ~ : ~~ ~i .CTS./~/yLn~~.i~ ,~, C SEAL) 7~i~tness to signature' oT ~ ~ ~'~ ~ ~ • • ~• -~

~~:itnAsc ;t,o ..^i~rnature of 0`~to B. Suhr ~iz~. l F

.. ~ ;

'~litnesa to sir*nuture oP Franca C. Noon ~ j

G .

/- ii ~ _.

~ .. ~~~~GueL~--~ SEAL W1tne s to e i~Cnature .of - . ... ~. ,

~ ; '~ .

~.:'itneea to signature of --~-~J ~ — ~) .- Pflul F. Cedni~,n. .: t : ~: OJ~~. :~

Nitneas to signature of HAfO~.d ~~81d0

9 ~ ~/ Grentc-es.

~£ i-^"'~ /~

.'. k.~,. _.~~: _ ~- 9teta ot~ Cali1'orrEle, ) :, ss :~,' City end County of San Francisco ) i On this `S~',;~,► de9 oP ~ ~ .D. 1923, ~~

bePore'rhe; - - `r, a notary publio~~in' and eor~the

coiuitiy .eY1d• etaLa• ePoreegid,-residlrig th9rein~end duly comniseioned

'enc~ ~worri, persori~fly~a~pdared 'Lualen L. Nw~n. lrnoim to me to be

the person i+lloee `Hems 'ie ~subaoribed ~~o the foregoing instrument,

end''~'o1rno~I"edged I to me that ~he executed the _eemo.

'`WTTNES3~ ray hend~a~na ofPioial ~aonl tt~o ~dey and year 1Bat

~G~ ~cr~ o .erg• u 1 c. (~ ',iy'commission sxpireeGV,e~G. ~ ~'~! /Qyr `~ - -•

-~~ ~. ~ SS '

On thle ~~ ~ ~~ de Y of//(r ~ ~ •~~. ~'~~•1`~.:.' ~ A.D. 1923, before me, QL'F1U McFABUHD e notarq public in end Por the countq end stnte etoreeeld,' re aiding theroin end duly co~~.aeioned end, eNarn, personally appeared_Peul. N. tlunn, .imor+n to:me,.,to. be th9 person Ahose Mane la subscribed to .the foregoing•.inetrument, ar~d nclrnovrledg~d to me _that he _ exe~c~uted..ths., same .

liIT1dESS my hand end ,aCPiCiel .sae1_the_;dey and yeer lest above rrl,ttsn. \_ ~, ,'~

qtr Cummsa~~o~ ~ .~:' j Erplrea JtaJ,]0, ~~s. ~~- o` ~'~ , ~ery , ~u a. tdy corroaission expires ~ "

(12 ) ~.

ste ca , or .. L~, '' n ,~, ss County of ,dQ~(~!jG~

On th ../ . ~_ day of,~~--,~ .-', .. A.D. 1923, .

be Pore u~,~_~- , a notary publio in and_.for the '

county and,e,tete.aforeasld, residing therein and duly.00mmiealonad

and morn, _peruonally e:ppeered.t71111em L. 6leraech, lmown to ma to ~

be the;pereon Nhoee name Se eubsgribed to the foregoing instrument

aclmonled~ed ,to me that h9..e~ecuted the same. end •... ~ ~. :iITt~SS my hand and official peal the dad and year last i

above e~ritten.

"~ ]A?y commie~lon expireF .,~-.~~ ~s-~-

state' oP~ - SS County of. ~ )

On, thie ~,G -~~° day of O~~ A.D. 1923,

~~oz^~;me, notary public in and for the county

and atata aforesaid, residing therein end duly oommiasioned . and

scorn, pereonallq appeared Ernest A. Thornhill, irnonn to me to be

the person Whose name le eubecribed to tt~e foregoing inetrument~

and eolmoflledg~d to me that hs executed the snmo. witness my hand and ofPiciel seal the dny and year lost

above written. - ?

My corraniesion expires , ,~s

(13} ~~nsYws W'te w~eY-',Y~+~'vs!-±~5... '+E r~. ,y.,. ~~ •,~ •t, ~.,t.. ,~z ~_ „3~ gr~~ pt•.. ~ . ,x ,t i , Sdie '2 :' .~.~. ~ ' 2~,- - n

" On "this „~~"t' T~ d~r~ "'~"~ oR~C'~fa.~.6.Gt A.T~:•'~.$t 2~~3~ •'_~ ..,': i 'a.,..~.'..r~. ~ X~.c ~ :'~~..~~^~s,, :°..T~~r-ix viv~"~~'ir~ - ~~r t •. ,~ a~ ,~i,~~ -:',r' ~ - !~i~6, ~ . . Vvi Vj Q ~~ :- a shd"t34~~y;'~St~iicl~~~i~ `~ndi Pc~;'~h~s~noti~itq~~x. .. ~~~w>-b ~s~" ,-, Fti ~:.~l,fart .,tie r'-.~.~ y' ~ - r~r~ a %.rt ~::~~"i'"` t~~ ~2"`..-'~ ; ~ ~;~~ -~i:î~a-,rte t.i'~ ~~~'~` ~bn~~-~bt9~te:.~ai~or~aii~', ~~e~ia~rlg`~11~~oreìn~~S~C~~''tl~'y~ctlm~t~'~ò~iel~'~s~i~~` 1 ~~,ewor~,. y ~ ,, .~ M l~erd~m~'~ y ~~~pe erect ~~~c~s-Bra..-Sun~?}~~io~ `to- `, ,.. -:.r s ,t ..~ ~ 1+~, ~ ~ ~,.~ ~t ~r„ ~ `~b:~~e ~~ ems fir" ,:: , b ~.

~N ~A Y~ E x 'a ~✓~"~ F~ A y„' d ~ car Y,' f ~ `r 'f~ ~~e '~i ~r ~,t ~: "?~ r ' ~~~ :s t~" ~ ~rF Saar s r ~ 1~".Std t ~~„, _. sec ~ t~ ~ c. i. ~„yY ~~ t ~~ «:r. ~y ~j`1 +• e r. z ~ ~ ~ ~ -,. ,}. +~' ~

s~. _ + F `r Gri th38 dbhyy ~' A✓)~r1~923~ ~-t~ ~r ...y, c~ -' ba~iso~ me,-- '~ ,j'i ekctibt~r~`~~tiblic~,,an~PO~ ~ti~e Z county w nrid~ s~ - eforee6ld r r'eaidin~ ~Yf9~e~ ~~ ~~~o~1~'d`a~Oned .. . i`. ;fi1l~ i .t ~ si. .f ~ ~ ~ t L ( z ~'~'_~ ~nS.;r ~,1 and exorir;~ pe`i~eonelly, appeared Fbsnoie. H6 on,-,l~ b a'~~m~n~~,~~o~ be • ~tii~t.~ei~eo~f.,+hveie~ nab' ~~~ub~Fo~t3e?'d'~t~~~hb.-~'6~$' ibtf,g ~,~r~nentr, and a cImoYle dge d ta .~ _.: ,rr~ % ttie.t tie axe diitad? the='same. ; , ~ } + ` ~ ~I,ITNE3$' ~ ~ ~ m9 hand,an~ bC1'S~Ta~, seal Lhb,fey and a.~f1~e. J

~9,t3Q~v~3"~ttr~i8l"f~lr _ ~ / b ~i~'rr v ~''ti "'y~:y,j?"F`~; — a' r.

ti ;., ~1_! NOtB~`9'" 1Cj~s~ _ :~~ _ ~~ .Liy omAmi~esion expi~~.a•.1Y- }~ ~ - ~ ~~'~~.

:.~ { .~ ~- +~ ~ ;~ ~ C ~4~ '~' 1 S to Le of ~ , ~~%'-~%~- ~ ) SS j~.Oy,~%~-t._L ~ County ,of ~ i On this ~ dey of ;2Gc~c~f~y q,D, 192'; before me,~ ~ e notary ~ublic in end for tf~e co~ty J end stetE nforeseid~ rest@in6 therein acid duly commissioned and sRorn~ personally appeared Carroll iJ. 17V~itnBn, known to me to be

L'ne person whose name is sul~ecribed to tl~e foregoing instrument, end ecluzoeledged to me that tie executed tf~e same.

►'IIlNESS my Bend e~id official seal the day end year lest above r;ritten.

i - ~ otnr~ u ic.

1~~ corttr.ission exnlrea~`-~~/;_. ~-o/lam J~~ i

Sta to of ) • SS County of

On this day oP A.D. 1923, before me, srs~'~, e notar~~ public in and for the county end state e ~ residing therein on~l duly cormnissioned and sxorn, p°rsonelly eppeored Pe u1 F. Cedmen, lanovm to me to be the person wt~oea Warne is subscribed to ti,e foregoing instrument, end eclrnowledged to me that he executed tt~e same.

t7ITNF'SS my hand and offlclel seal tl,e dny and yenr lest ~ above v+ritten.

o ar u c. —

M9 commission expires G%/~y~/~~ ~~,. 1 p~ /J ~1 ss co~,ty or d ,~/,2c.

ttlis On doy of a, L. 1J23, ~ before me,~Y~~ ► n, - ~ e rotary public in and Sor the county and state eftes~eic, res~ .ln~ tt,erein end daily corrm~iesioned and sv+orn, personally appeAred ~!orold R. w,eldo, 1mo~vn to me to he tFie person whose name is subscriY,ed Lo the fore:~o~ng instrument, and _ acknowledged to me that he executed the some. ~VI1'J1G9S my hand and official seol the de}~ and year last above r~ritten. L .~'~ ~ ~~, .. •~-;~~ ' .~--~`q u c. MV commisuion expires. `"~7 (Y l•/;t L.

(16~

~~~ I~~nCI~

Deep Springs College TDS Meeting, Spring 2014

rustees o ee rin s o e e

March 21-2 3.2 014

Page ~ 1 Deep Springs College TDS Meeting, Spring 2014

Table of Contents General...... 3 Meeting Schedule ...... 4 Trustees &Officers Roster...... 6 Subcommittee Rosters ...... 8 Student Body Rosters ...... 9 Staff&Faculty Rosters ...... l 0 TDS Housing Chart ...... 11 General Session ...... 12 President's Message ...... 13 Student Body Trustees' Report ...... 14 Student Body President's Report ...... 16 TDS Meeting Minutes from 9/20/13-9/22/l3 ...... 17 Academic Affairs...... 27 Academic Affairs Agenda ...... 28 Academic Affairs Minutes from 9/20/13 and 9/22/13 ...... 29 Dean's Report...... 35 Library Report ...... 38 Curriculum Committee Report...... 39 Applications Committee Report...... 40 Communications Committee Report...... 42 Review and Reinvitations Committee Report...... 43 Telluride Liaison Report ...... 44 Budget &Operations...... 47 Budget &Operations Agenda ...... 48 Budget &Operations Minutes from 9/20/13 and 9/22/13...... 49 Director of Operations Report...... 57 Fundraising Report ...... Investment Report ...... 71 Investment Committee Minutes ...... 72 Farm and. Ranch Report...... 73 Garden Report ...... 87 Maintenance Report ...... 89 Labor Commissioner's Report ...... 9l Safety...... 92 Safety Committee Agenda ...... 93 Interim Safety Committee Minutes ...... 94 Safety Committee Minutes from 9/20/13 ...... 96 Safety Report...... 99 Nurses'Report ...... :...... 101 Fire Chief Report...... 108

Page ~ 2 Deep Springs College TDS Meeting, Spring 2014

Student Body Trustees' Report

Regarding the Health of the Student Body

It's not uncommon for students to feel frustrated or dissatisfied with their experiences at Deep Springs, a state usually emerging out of discontent with mediocrity. Sometimes it's a matter of falling short of the notion of excellence that serves as a motivating force, while at other points it's a matter of wishing that one's compatriots would acquiesce to some personally-held notion of virtue. Often the very structures and activities that we think of as immutable givens and associate fundamentally with what Deep Springs is lead to a certain disillusionment that contributes to this matter. They may contribute to this by fostering social norms that promote exclusivity or, more commonly, through an insufficient amount of social and emotional wisdom.

Term 4 was marked by two important rejections of such structures present within the labour and self-governance pillars. With regard to self-governance, the Student Body has collectively decided to suspend the use of Robert's Rules of Order, and the primacy of the Student Body Bylaws in how we govern ourselves. This has been decided on as a way of experimenting with organic modes of community-building in reliance upon our own creativity and concern to create a meaningful space for social engagement and self-governance.

In labour, we've likewise decided to diverge from the norm, although, admittedly to a lesser extent. Each of us remains committed to 20 hours of labour each week, but we are experimenting with the thesis that we promote better outcomes in labour by intentionally dividing our labour according to interest, and sharing typically unpopular labour.

The fruits of these experiments will blossom as the term progresses and the academic year nears its end. Ultimately, as the Trustees of Deep Springs, you all ought to be aware of these experiments, and our reasons for engaging with them. In response to undercurrents of dissatisfaction with the status quo, we are making use of what powers we have as a self- governingbody to push our desire to inhabit a more intentional intellectual community.

We both encourage all of you to talk with students about the recent developments around self- governance and labour during your time in the valley. Though the power to make many structural changes to students' experiences rests within the Student Body, we all should be thinking more explicitly about how current structures need to be reformed in order to satisfy a student body that has over the years become, on average, much older and more academically experienced.

Page ~ 14 Deep Springs College TDS Meeting, Spring 2014

Regarding Coeducation

In a vote taken last week, all members of the Student Body, save for a small handful who abstained, voted in favour of Deep Springs' continued commitment to coeducation.

Regarding the Trustees of Deep Springs

Generally, TDS has become synonymous with the question of coeducation. If the Trustees would like to broaden its perception within the Student Body beyond this question, they should make a concerted effort to entertain conversations on issues other than coeducation.-

Miles Mitchell, DS'12 Christian S. Vlcek, DS'13 Budget &Operations Trustee Academic Affairs Trustee

Page ~ 15 Deep Springs College TDS Meeting, Spring 2014

Dean's Report

Next year will see a new dean, new chairs of Science, Political Science and new but returning chair of Humanities. This is my final opportunity to give the Board a dean's eye view of things academic, for I will be returning to teach at Saint Mary's College of California and to live with the community of De La Salle Christian Brothers there. Amity Wilczek will be assuming the duties of the dean while continuing to offer one science course each long term. Our recent search has selected Michelle Lanan, an entomologist from Arizona, to assume primary responsibility for the sciences as Herbert Reich chair. Joel Schlosser will be leaving to take a tenure-track position at Bryn Mawr. A search for a social scientist (preferably a comparativist) to hold the chair for one year is under way. Jennifer Rapp, after teaching for the Arete Program this summer, will seclude herself and complete a second book (her first, Ordinary Oblivion and the Self Unmoored: Reading Plato's Phaedrus and Writing the Soul is due out, March 3, 2014, according to Amazon.com). Seating herself once again in the Humanities chair, Katie Peterson will return to Deep Springs one year after having taught Summer Seminar with David Neidorf. (She saw two volumes of her poems and poetic narratives published in Fall 2013.) Professor Wilczek and Peter Daniels, newly-elected chair of CurCom, will work on the renovations. Facts, data, and information the Board might need for its deliberations should be available in a pair of comprehensive reviews: the President's "Pillar Review" and the report to ACCJC, our accreditors. Laura Marcus has brought the first document to term, after athree-year gestation. Laura and Justin Kim together produced the focused mid-term report to the accreditors. A second pair of smaller reports fills in the picture. John Tanner Horst, chair of the Curriculum Committee reports on the annual review of the Academic Policy, courses and classes, and the current and upcoming faculty we have hired to teach them. Jill Brewer contributes a report on the library.

What used to be called the life of the mind flourishes at Deep Springs. The most current evidence for the health of our mental ecosystem seems to me this: skilled, educated, credentialed, intelligent persons from all walks of academic life apply to teach here whenever an opening is publicized. Better evidence even than this: several of those applying for our few short-term and fewer long-term appointments have taught here already. Their dreams of Deep Springs confronted the waking reality and they (ambiguous "they") were not shattered. Evidence just as good: many of the students who apply and most who are accepted have some kind of vision of a community that thinks while working and living together. This is perhaps especially true of students transferring in from elite colleges. Whatever service the youth are thinking of contributing to the larger human community, most of them think of Deep Springs as a place to think about that human community and about service to it while living in and serving a small instance of it.

Page ~ 35 Deep Springs College TDS Meeting, Spring 2014

Student speeches often express discontent with academics at Deep Springs. And always the question, rarely well answered, is How can the study of, say, Homer's Odyssey help me ready myself to fulfill my pledge of service to humanity? Would it not be more consonant with Nunn's vision and better for me to get college credit for the learning that takes place on gophering missions for Farm Team? The college mission statement expresses and does not resolve a tension between the learning that is used to improve the human condition and learning that liberates the soul of the student. (1 continue to puzzle myself about the meaning of service in a world where meaning seems to have gone missing and each of us is left to make what meaning he or she can. I have composed a longish letter to Beth Thomas saying that the spiritual health of the academic community is strong. In it I nominated Friedrich Nietzsche as patron saint.) An allied discontent with the credit-accumulating academic economy also makes itself heard from time to time. Our local civilization fosters both discontents—additional symptoms of health.

Paired things I think I have learned while here:

The job description, "Duties of the Dean," has had less effect on what the dean has done and left undone than the willingness of others to take on or drop offjobs a dean could do. The longer 1 have lived here the less freely disposable time I find I have had and the greater the disparity I note between what I might have accomplished and what I have actually achieved.

Faculty respond well to even small amounts of appreciation—not thanks so much as intelligent prizing—expressed by other faculty, staff, students, former students, and members of the board. Students, however, find it hard to believe that the faculty had lives prior to crossing the cattleguard for the first time and even now have lives that do not orbit Deep Springs as moral center of the universe.

The college, or the concept of the college, is almost instantly fascinating to almost any group of American academics; it is a great subject for small talk at National Conference no-host cocktail parties. What gets written about the college in the New Yorker, say, has a widespread, perhaps scattershot, but lasting effect. For many in the academic world, Deep Springs lurks in memory's dim recesses under the topos "interesting places."

The lure of admission to Ivy League colleges or to "Hidden Ivies" remains strong among many of those starting college at Deep Springs or transferring into Deep Springs from other "top tier" colleges. Even so, students at Deep Springs grant far more respect to alumni of Deep Springs than to alumni who attended Whatever Ivy U. Private mutual recognitions trump public reputations.

In conclusion, my thanks to the board for its attention to this learning community and its indulgence of my cramped epistolatory style. The board may be assured that [shall continue to

Page ~ 36 Deep Springs College TDS Meeting, Spring 2014 be a goodwill ambassador for the college. The academic novel I am planning to write during my retirement will only add to the college's sound academic reputation.

Gratefully, sincerely,

,, , ~ _ a _,- _. _ ._ _ .. ,.

Kenneth W. Cardwell, FSC

Page~37 Deep Springs College TDS Meeting, Spring 2014

Applications Committee Report

Membership: Keenan Lantz, DS1 ];Zachary Robinson, DS12; Pablo Uribe, DS12; Jacob Greenberg, DS12; Miles Mitchell, DS12; Ezekiel Reffe-Hogan, DS13; William Hunt, DS13; Lauhglin McKinnon, DS13; John Davis, DS13; Jill Brewer, Staff; Laura Marcus, Staff; Joel Schlosser, Faculty; Jennifer Rapp, Faculty.

Current Activity

ApCom finished interviewing prospective students near the end of term 4. We are currently in the process of hearing appeals and sorting students to obtain a class list and a waitlist. The goal is to accept 15 students with the aim of a class of ]4. All applicants will hear from us no later than April 1.

It is worth noting that the committee had an unusually strong applicant pool this year. We had 199 applicants, which is a substantial increase over the approximate 140-150 male applicants from last year. It has been observed that the impact from press has a delayed effect on recruitment, so the press over coeducation may be the cause of the larger pool. Anecdotally and apart from the larger pool, it also seems that the average first-round applicant this year was substantially stronger than in years past. Year-to-year averages in first round scores (every reader scores applications on a scale of 1-5) would also suggest that the average first-round applicant is stronger this year, although variations in scoring from year-to-year make this a somewhat unreliable mechanism of evaluation.

Changes this Year

As we discussed during the fall 2013 TDS meeting, one of ApCom's major goals for the year was to reduce the time commitment for the committee during the interview process. That process seems to have been successful. ApCom last year required about 15 hours a week per member. We have cut that number almost in half this year to reduce the time to about 8 hours per week. A number of changes contributed:

1. Cutting the word count for the second round. Instead of 4 essays for a total of 2,500 words, this year we reduced the second round to 2 essays of no more than 1,500 words. This reduced the time spent reading each application. 2. Time-caps of the interview and deliberation process at approximately 1 hour 15 minutes. Deliberations in previous years have been known to go on for hours. 3. An explicit expectation that no more than 45 minutes should he spent reading each application.

Page ~ 40 Deep Springs College TDS Meeting, Spring 2014

[Draft)

CENTENNIAL CAMPAIGN CROSSES FINISH LINE: ENDOWMENT REACHES $20MILLION

The fiscal year 2013 saw us successfully complete the Centennial Endowment Campaign. With an estate gift from DS friend in the spring, Deep Springs surpassed the goal of raising $15 million. By the end of 2013, the value of the college's endowment surpassed $20 million for the first time.

HISTORY

In 2005, on the recommendations of an exploratory committee chaired by former trustee Bill Allen DS'42, the DS board of trustees determined it was necessary to substantially improve the condition of the college's endowment.

At the time, the college had been operating essentially under a budget freeze for three years, even as costs of energy, insurance and facilities continued to rise. Salary levels for staff and faculty had fallen well below the competitive targets established previously by board policy. Although the college had been completely rebuilt from the ground up at the turn of the century with funds generated by enormous effort and the generosity of the DS community, the college stood short of sufficient funds to operate the college at the high level befitting its mission.

Under the fantastic leadership of President Ross Peterson, more than forty individuals formed three advisory committees of alumni, parents, and friends. An executive steering committee gathered with co- chairs Dave Hitz DS'80 and Jack Newell DS'S6 at the helm and planning began in earnest in 2006. The groundwork was laid throughout the year as the organizing committee approached scores of alumni and friends of Deep Springs who pledged their support for the campaign. When we began, the value of the endowment stood at just over $lOmillion, and our goal was to raise an additional $15million in five years.

.In a press release announcing the launch of the campaign in 2007, Michael Stryker DS'64, board chair at the time, stated the essential goal of the campaign: "we need to expand the endowment in order to provide the highest quality of academic experience for our students." A substantial endowment allows the college to create stable budgets by reducing reliance on annual contributions that can fluctuate year to year. In 2006, the Deep Springs endowment was providing only 31% of the college's operating budget.

Of course, less than. two years into the campaign, the "Great Recession" struck. Although Deep Springs fared better than average among U.S. colleges, we still saw the value •of our endowment assets plummet by 30% in the middle of the drive, with no end to the bad economic news in sight. It appeared as if the national economy would rob us of our gains at the very moment the greater DS community was making the most generous effort.

In an effort to protect the endowment and still maintain momentum, in 2010 the trustees recalibrated the Centennial Campaign. Going forward, all contributions to the college were calculated toward the common

Page ~ 68 Deep Springs College TDS Meeting, Spring 2014 goal, since any funds given directly to the annual fund or capital reserve is money that need not be drawn from investments, thereby allowing investment income to grow the endowment.

Although the original goal was to complete the campaign by 2012, in light of the most challenging economic times, we're pleased with being able to cross the finish line only one year later. The graph shows the cumulative results.

RESULTS

Capital &Program Gifts '09-'13 $782,409

Gifts to Annual Operations'09-'13 $2,539,765

Bequests to Endowment'06-'13 $2,851,146

Gifts to Endowment '06-'13 $9,422,273

Total FY2006-FY2013 $15,595,593

The charts in this report illustrate the benefit to Deep Springs already. We navigated the economic downturn without deficit spending and maintained the endowment intact. By the campaign's close on June 30, 2013, the endowment was at its largest ever, and as of December 31, 2013, invested funds stood at $20,215,488. For the academic year ended 2013, the endowment provided 53% of our operating funds. That percentage will be even higher for the current academic year.

As a reminder: board policy limits annual draws from the endowment to 5% of investments on a rolling 3-year average. With the now substantial base created by contributions to the endowment, this conservative approach maintains stability; avoiding the financial uncertainties the college struggled through for so many decades. We still have a ways to go to reach our goal of providing 2/3 of the operating budget from endowment draws, but we've made a huge step forward.

That being said, we never want to eliminate the need for annual giving altogether, for two primary reasons. First, to do so would require an exorbitant sum in investments; on the order of $40million. Second, a public interest institution like Deep Springs actually benefits from being in a position where it needs to explain and justify its work to its constituent community. A strong endowment doesn't replace annual giving outright. Rather, it affords stability and allows the students and staff to focus more energy on improving the academic and labor programs. Continual input and participation from alumni, family and friends invigorates the college, pushes us to improve as an educational institution, and builds the Deep Springs legacy.

Page~69 Deep Springs College TDS Meeting, Spring 2014

The Centennial Campaign could not have been accomplished without help from the entire Deep Springs community: students who built the web pages and participated with committees and interviews, alumni who volunteered their time in planning and strategy, parents and friends who reached out to their peers, office staff who managed the nuts and bolts of the process, and everyone We want to specifically acknowledge Teri Fox and Gil Stayner, who contributed substantial effort to the organizing process and created the beautiful fundraising information packets for the volunteer solicitors. Their son Christian Stayner DS'00 also went to great effort in directing and producing the fundraising DVD used in the launch of the campaign. We're very thankful to all three for their creativity, energy and work.

Finally, and most importantly, we're grateful to everyone who generously contributed at all levels. Such commitment from so many individuals to support the long-term vitality of Deep Springs secures the college's position as we approach our Centennial celebration. Of special note is how many people made Deep Springs a beneficiary of their estate. All those listed below have played their part in assuring that this unique Nunnian education —training for a life of service and leadership —will continue for our students, free of tuition. Categories reflect annual gifts and capital &program gifts from 2009-2013, and endowment gifts from 2006-2013.

Page ~ 70

1 Christopher L. Campbell #116329 ccampbell@bakermanock. com 2 Jeffrey A.Jaech #076876 ~; •, [email protected] J c r 3 Dirk B. Paloutzian #173676 [email protected] 4 Diane E. Coderniz #279458 [email protected] 5 Amber M. Bridges #290127 [email protected] 6 BAKER MANOCK & JENSEN,PC 5260 North Palm Avenue, Fourth Floor 7 Fresno, California 93704 Telephone: 559.432.5400 8 Facsimile: 559.432.5620

9 Peter E. Tracy #078185 LAW OFFICE OF PETER E. TRACY 10 106 South Main Street, Suite 200 Post Office Box 485 11 Bishop, CA 93515 Telephone: 760.872.1101 12 Facsimile: 760.872.2971

13 Attorneys for David Hitz, acting on behalf of the Board of Trustees of the L. L. Nunn Trust 14

15 SUPERIOR COURT OF THE STATE OF CALIFORNIA

16 COUNTY OF 1NY0

17'~

18 I In re the Matter of the CASE NO. SI CV PM 1253232

19 L. L. Nunn Trust for the benefit of PETITIONER DAVID HITZ, ACTING ON Deep Springs College under the Deed BEHALF OF THE BOARD OF 20 of Trust dated November 5, 1923 TRUSTEES OF THE L.L. NUNN TRUST'S RESPONSE TO SECOND SET OF 21 SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 22 OBJECTORS/RESPONDENTS KINCH HOEKSTRA AND ED KEONJIAN, 23 TRUSTEES OF THE L.L. NUNN TRUST

24 Trial Date: Apri] 28, 2014

26 II PROPOUNDING PARTY: Respondents OBJECTORS/RESPONDENTS KINCH

27 HOEKSTRA AND ED KEONJIAN,TRUSTEES OF THE L.L.

28 NUNN TRUST 1446188v1 /9478.0008 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 11 RESPONDING PARTY: Petitioner DAVID HITZ, ACTING ON BEHALF OF THE

2 BOARD OF TRUSTEES OF THE L.L. NLJNN TRUST

3 SET NO.: Two

4 Pursuant to Sections 2030.210, et seq., of the California Code of Civil Procedwe,

5 Petitioner DAVID HITZ, ACTING ON BEHALF OF THE BOARD OF TRUSTEES OF THE

6 L.L. NUNN TRUST ("Responding Party") responds to the Second Set of Special Interrogatories

7 propounded by Respondents OBJECTORS/RESPONDENTS KINCH HOEKSTRA AND ED

8 KEONJIAN, TRUSTEES OF THE L.L. NLJNN TRUST ("Propounding Parties") as follows:

9 It should be noted that this Responding Party has not fully completed investigation

10 of the facts of this case, has not fully completed discovery in this action, and has not completed

11 preparation for trial. All of the answers contained herein are based only upon such information

12 and documents as are presently available to and specifically known to this Responding Party, and

13 disclose only those contentions which presently occur to such Responding Party. It is anticipated

14 that further discovery, independent investigation, legal research and analysis will supply additional

15 facts, add meaning to the known facts, and perhaps establish entirely new factual conclusions and

16 legal contentions, all of which may lead to substantial additions to, changes in and variations from

17 the contentions herein set forth. The following responses are given without prejudice to

18 Responding Party's right to produce evidence of any subsequently discovered fact or facts which

19 this Responding Party may later recall or uncover.

20 RESPONSES TO SPECIAL INTERROGATORIES

21 SPECIAL INTERROGATORY NO. 25:

22 State the number of students who applied for admission to Deep Springs College in

23 ~ each of the past l 5 years.

24 RESPONSE TO SPECIAL INTERROGATORY NO.25:

25 Responding Party objects on the grounds that this interrogatory is overly broad,

26 unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the

27 discovery of admissible evidence. Additionally, this interrogatory seeks privileged and/or

28 confidential information. 1446188v1/9478.0008 2 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 Subject to, and without waiving the foregoing objections, Responding Party

2 responds as follows:

3 YEAR KUMBER OF APPLICANTS

4 1999 Unknown

5 2000 Unknown

6 2001 75

7 2002 143

8 2003 121

9 2004 155

10 2005 140

11 2006 168

12 2007 154

13 2008 130 14 2009 112 15 2010 151 16 2011 157 17 2012 164 18 2013 141 19

21 SPECIAL INTERROGATORY NO. 26:

22 State the number of students accepted for admission at Deep Springs College in

23 each of the past 15 years.

24 RESPONSE TO SPECIAL INTERROGATORY NO. 26:

25 Responding Party objects on the grounds that this interrogatory is overly broad,

26 unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the

27 discovery of admissible evidence. Additionally, this interrogatory seeks privileged and/or

28 confidential information. 1446188v1/947R.0008 2 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 Subject to, and without waiving the foregoing objections, Responding Party

2 responds as follows:

3 YEAR NUMBER ACCEPTED

4 1999 Unknown

5 2000 Unknown

6 2001 14

7 2002 16

8 2003 15

9 2004 18

10 2005 15

11 2006 13

12 2007 18

13 2008 14 14 2009 18 15 2010 19 16 2011 18 17 2012 ~ 13 18 2013 15 19

21 SPECIAL INTERROGATORY NO. 27:

22 State the number of students newly enrolled at Deep Springs College in each of the

23 past 15 years.

24 RESPONSE TO SPECIAL INTERROGATORY NO.27:

25 Responding Party objects on the grounds that this interrogatory is overly broad,

26 unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the

27 discovery of admissible evidence. Additionally, this interrogatory seeks privileged and/or

28 confidential information. iaa6~ss~i i9a~g.000s 4 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 Subject to, and without waiving the foregoing objections, Responding Party

2 responds as follows:

3 YEAR NUMBER ENROLLED

4 1999 13

5 2000 13

6 2001 13

7 2002 16

8 2003 12

9 2004 13

10 2005 15

11 2006 11

12 2007 14

13 2008 13 14 2009 12 15 2010 17 16 2011 12 17 2012 13 18 2013 14 19

21 SPECIAL INTERROGATORY NO.28:

22 For each student who completed his education at Deep Springs College in the past

23 15 years and within one year thereafter enrolled in another college or university, identify the

24 college ar university in which that student enrolled. For the purposes of this interrogatory, the

25 student need not be named.

2E RESPONSE TO SPECIAL INTERROGATORY NO.28:

27 Responding Party objects on the grounds that this interrogatory is overly broad,

2F unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the 1446188v] /9478.0008 5 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 discovery of admissible evidence. Additionally, this interrogatory seeks privileged andlor

2 confidential information.

3 Subject to, and without waiving the foregoing objections,

4 YEAR Colleges In Which Students Enrolled

5 1999 Columbia University, Hampshire College,

6 Stanford University, Harvard University (2),

7 Swarthmore College, California College of Arts

8 and Crafts, UC Berkeley

9 2000 No schools known

10 2001 Oxford University, Brown University, Harvard

11 University, Columbia University

12 2002 Yale University, University of Lund (Sweden),

13 Harvard University (2), Cooper Union School 14 of Art, Evergreen College, Dallas County

15 Community College, Oberlin College, Temple

16 University, Columbia University (2), University

17 of Chicago

18 2003 Oxford University, Harvard University,

19 University of Chicago, Wabash College

20 2004 Harvard University (3), Oxford University, UC

21 Berkeley, University of Chicago (2), Stanford

22 University, Yale University

23 2005 Yale University, Brown University (2), Harvard

24 University (2), Massechusetts Institute of

2S Technology, Stanford University, Cornell

26 University, New College of Florida, University

27 of Florida 28 1446188v1 /9478.0008 6 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 2006 Williams College, UC Berkeley, Brown 2 University (3), Yale University, Swarthmore

3 College

4 2007 Stanford University, Brown University (4), 5 University of Chicago (3), Bard College, UC

6 Santa Barbara, Yale University

7 2008 University of Chicago (2), University of 8 Georgia, Oxford University, UC Berkeley,

9 Harvard University, Brown University (2)

10 Macalester College

11 2009 University of Toronto, University of Chicago

12 (2), Princeton University, Middlebury College,

13 Brown University

14 2010 Brown University, Reed College, Cornell

15 University, Yale University (3), UC Berkeley

16 2011 Brown University, Hampshire College, Yale

17 University (3) University of Colorado Boulder

18 2012 Unknown

19 2013 Unknown 20

21 SPECIAL INTERROGATORY N0.29: 22 For each student who completed his education at Deep Springs College in the past 23 15 years and within one year thereafter became employed or self-employed, identify the employer 24 or nature of self-employment of the student. For the purposes of this interrogatory, the student 25 need not be named. 26 RESPONSE TO SPECIAL INTERROGATORY NO. 29: 27 Responding Party objects on the grounds that this interrogatory is overly broad, 28 1446188v t / 9478.0008 7 PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the

2 discovery of admissible evidence. Additionally, this interrogatory seeks privileged and/or

3 confidential information.

4 Subject to, and without waiving the foregoing objections, Responding Party

5 responds as follows:

6 YEAR Work After Deep Springs

7 1999 Firefighting (Oregon)

8 2000 Volunteering (Mexico), Ranching construction,

9 Promoting Sister's Music Career, Cowboy

10 (Deep Springs)

11 2001 Preparing for piano auditions, Volunteering

12 (Nepal), Cowboy (Deep Springs)

13 2002 Cowboy (Deep Springs)

14 2003 Farm Manager (Virginia), Horse Packer (Sierra

15 Neveda), Construction, Volunteer (Italian

16 Architecture Organization), Farm Laborer

17 (Spain), Cowboy (Deep Springs)(2), Farmer

18 (Deep Springs)

19 2004 Intern for documentary film

20 2005 Habitat for Humanity, Nature Conservancy

21 2006 Cowboy (2), School employee, Teacher

22 (Waldorf School)

23 2007 None

24 2008 Teacher of English (China), Cowboy, 25 2009 None 26 2010 LDS Mission (Belgium), Volunteer (Nepal) 27 2011 Intern (Sieben Ranch, Montana), Teacher 28 14461 S8v I / 9478.0008 g PETITIONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 1 (China), Intern (Geffen Medical Lab, UCLA)

2 2012 Unknown

3 ~~ 2013 Unknown 4

5 SPECIAL INTERROGATORY NO. 30:

6 For each student who completed his education at Deep Springs College in the past

~ 15 years and within one year thereafter attained an elected or appointed government office, g identify the government and the elected or appointed government office attained by the student.

9 For the purposes of this interrogatory, the student need not be named.

10 RESPONSE TO SPECIAL INTERROGATORY NO.30:

11 Responding Party objects on the grounds that this interrogatory is overly broad,

12 unduly burdensome. Further, this interrogatory is not reasonably calculated to lead to the

13 discovery of admissible evidence. Additionally, this interrogatory seeks privileged and/or

14 confidential information.

15 Subject to, and without waiving the foregoing objections, Responding Party

16 responds as follows: None are known to have entered into government office. 17 DATED: February ~,20 ] 4

1 g BAKER MANOCK & JENSEN,PC 19

20 By~ Christopher L. Campbell 21 Jeffrey A. Jaech Dirk B. Paloutzian 22 Diane E. Coderniz 23 Amber M. Bridges Attorneys for David Hitz, acting on behalf of 24 the Board of Trustees of the L. L. Nunn Trust

28 1446188v 1 / 9478.0008 9 PETIT[ONER'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS VERIFICATION

1 have read the foregoing PETITIONER DAVID HITZ, ACTING ON BEHALF OF THE BOARD OF TRUSTEES OF THE L.L. NUNN TRUST'S RESPONSE 4 TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS OBJ~CTORS/RESPONllENTS KINCH HOEKSTRA AND ED KEONJIAN, TRUSTEF,S OF THE L.L. NUNN TRUST and know its contents. 6 " CHECK APPLICABLE PARAGRAPHS 7

8 X I am a party to this action. The matters stated in the foregoing document are true of my own knowledge except as to those matters which are stated on information and belief, 9 and as to those matters 1 believe them to be true.

10 I am an Authorized Representative of , a party to this action, and am authorized to make this verification for and on its behalf, and I make this 11 verification for that reason. 1 am infor►ned and believe aild on that ground allege that the matters stated in the foregoing document are true. _The matters stated in the foregoing 12 document are true of my own knowledge except as to those matters which are stated on information and belief, and as to those matters I believe them to be true. 13 _ 1 am one of the attorneys for , a party to this 14 action. Such party is absent from the county of aforesaid where such attorneys have their offices, and I make this verification for and on behalf of that party for that reason. 1 am informed and 15 believe and on that ground allege that the matters stated in the foregoing document are true. L o3 A~~-Eo 5 16 Executed on March ~ ~ , 2014, arro,California.

17 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. 18 r L 19

20 David Hitz, acting on behalf of the Board of Trustees of the L.L. Nunn Trust 21

1449424v1/9478,0008 PROOF OF SERVICE

2 STATE OF CALIFORNIA, COUNTY OF FRESNO

At the time of service, I was over 18 years of age and not a party to this action. I am employed in the County of Fresno, State of California. My business address is 5260 North Palm 4 Avenue, Fourth Floor, Fresno, CA 93704. On February 28, 2014, I served true copies of the following documents) described as PETITIONER DAVID RITZ, ACTING ON BEHALF OF THE BOARD OF TRUSTEES OF THE L.L. NUNN TRUST'S RESPONSE TO SECOND SET OF SPECIAL INTERROGATORIES PROPOUNDED BY RESPONDENTS 7 OBJECTORS/RESPONDENTS KINCH HOEKSTRA AND ED KEONJIAN,TRUSTEES OF THE L.L. NUNN TRUST on the interested parties in this action as follows: SEE ATTACHED SERVICE LIST

BY E-MAIL OR ELECTRONIC TRANSMISSION: I caused a copy of the 10 documents) to be sent from e-mail address [email protected] to the persons at the e-mail addresses listed in the Service List. I did not receive, within a reasonable time after the ll transmission, any electronic message or other indication that the transmission was unsuccessful.

12 BY OVERNIGHT DELIVERY: I enclosed said documents) in an envelope or package provided by the overnight service carrier and addressed to the persons at the addresses 13 listed in the Service List. I placed the envelope or package far collection and overnight delivery at an office or a regularly utilized drop box of the overnight service carrier or delivered such 14 documents)to a courier or driver authorized by the overnight service carrier to receive documents. 15 I declare under penalty of perjury under the laws of the State of California that the 16 foregoing is true and correct.

17 Executed on February 28, 2014, at Fresno, Cali rnia. r ]O

19 Janice L. Lewis 20

2' SERVICE LIST In re the Matter of the L. L. Nunn Trust for the benefit of Deep Springs College under the 2 Deed of Trust dated November 5, 1923 SI CV PM 1253232 3 Eric M. George, Esq. Attorneys for KINCH HOEKSTRA,EDWARD Ira Bibbero, Esq. KEONJIAN, TRUSTEES OF THE L.L. NUNN BROWNE GEORGE ROSS, LLP TRUST 2121 Avenue of the Stars, Suite 2400 Los Angeles, CA 90067 P:310-274-7100 F: 310-275-5697 7 e-mail: e~eor e~ (a~b~rfirm.com ibibberonn,b~rfirm.com

9 Joseph C. Liburt, Esg. Attorneys for KINCH HOEKSTRA,EDWARD ORRICK, HERRINGTON & SUTCLIFFE, KEONJIAN, TRUS'I'E~S OF THE L.L. NUNN 10 LLP TRU S7' 1000 Marsh Road 11 Menlo Park, CA 94025 N:650-614-7400 12 F: 650-614-7401 e-mail: iliburtn,orrick.com 13 Heather M. Hoekstra, Esq. Attorneys for KINCH HOEKSTRA,EDWARD 14 420 Coventry Road KEONJIAN, TRUSTEES OF THE L.L. NUNN Kensington, CA 94707 TRUST 15 P: 510-525-1514 e-mail: hmatsumoto(a~berkelev.edu 16 Peter Tracy, Esq. 17 LAW OFFICES OF PETER E. TRACY 106 South Main Street, Suite 200 18 Post Office Box 485 Bishop, CA 93515 19 P: 760-872-11 U 1 F: 760-872-2971 20 e-mail: invomononn,stanfordalumni.or~

21 Jon Michaelson, Esq. Attorneys for DEEP SPRINGS COLLEGE K & L GATES, LLP CORPORATION 22 630 Hansen Way Palo Alto, CA 94304 23 P: 650-798-6700 F: 650-798-6701 24 e-mail: ion.michaelson cr,kl~ates,com

2 l Tania M. Ibanez, Esq. Attorney General Supervising Deputy Attorney General 2 Charitable Trusts Section CALIFORNIA ATTORNEY GENERAL'S 3 OFFICE 300 South Spring Street, Suite 1702 4 Los Angeles, CA 90013 P: (213) 897-0218 5 F: (213)897-7605 e-mail: Tania.Ibanezna,doi.ca.~ov 6

DEF,P SPRINGS COLLEGE - 2009 Alumni Academic Survey -Overview of Results

Survey Scope

Number of alumni contacted: 640 88% Number of respondents: l64 25%

Number of respondents: 164 Attended college prior to DS 23 14% Took `gap year' after DS 57 35% Attended college after DS 161 98% Received Bachelors degree 156 95% Received M.A., J.D. or Md. 100 61% Received PhD. 55 33% Received post-doc position 5 3%

Distribution of ResAondents Percentage rates ofresponse from all decades were virtually identical

Professional Field 19406 _ 19506 19606 19706 19806 19906 Acad. Faculty (Math &Sciences) 5% 12% 12% 4% 3% 3% Acad. Faculty(Soc. Sci. &Humanities) 21% 9% 8% 12% 14% 6%

Accounting /Business Admin 1 % 12% 4% 2% 2% 0 Agriculture 0 0 4% 2% 5% 3% Business /Entrepreneur 0 13% 19% 13% 5% 4%

Computer /Software Engineering 0 6% 0 8% ] 0% 3% Design /Architecture 7% 2% 4% 4% 9% 10% Ecology /Environmental 0 0 4% 6% 4% 4% Engineering 5°/a 2% 0 6% 3°/a 0 Government Service 13% 9% 0 2% 0 0 Journalism /Writing 8% 1% 4% 6% 5% 16% Law 16% 12% 15% 12% 10% 9%

Medicine /Emergency Services 11 % 6% 8% 10% 7% 10% Military 1% 1% 0 0 3% 1% Ministry /Theology 0 9% 0 0 0 3% Non-Profit Administration 2% 0 0 0 3% 9% Public Policy 5% 0 1% 6% 7% 7% Scientific Research 5°/o 6% 2% 6% 5% 0 Teaching (Secondary) 0 0 4% 0 3% 9% Veterinary 0 0 8% 2% 0 0 Other 0 0 3% 0 2% 3%

November 1, 2009 DEEP SPRINGS COLLEGE - 2009 Alumni Academic Survey -Overview of Results

Primary Responses

1. To what degree did your experience at Deep Springs affect you with regard to these skills? (Composite Scorefrom all responses.) (Sliding scale from I ="not at all" to 4= "signiftcantl~~ ")

1. Critical thinking: 3.74 2. Ability to read: 3.61 3. Ability to speak: 3.67 4. Ability to listen: 3.55 5. Ability to write: 3.61 6. Leadership: 3.56 7. Appreciate multiple modes of inquiry: 3.32 8. Appreciate multiple modes of creativity: 3.06 9. Appreciate multiple vocations: 3.56

OVERALL: 3.52

2. Characterized as `most significant learning experience' (total >!00% because multiple answers were a/lowed)

53% Academics (humanities &social sciences) 10% Academics (math &hard sciences) 32% Labor Program 41% Student Body &Community

3. How relevant do you believe your Deep Springs education has been to your career and life? (Fell broadly in,four categories)

25% Fundamental. Deep Springs shaped who I am. 45% Very important. Continues to be a regular presence in my life. 21°/o Gave me skills that have been helpful in my work and life. 9% Not all that relevant to who I am and what I do.

4. How has your experience of service &community at DS influenced your approach to the same in your work and career? (Fell broadly infour categories)

12% Fundamental to the work 1 do and the service career I've chosen. 47% Very important. I approach work particularly with these ideals in mind. 24% Helps inform my work and my life in the community where 1 live. 16% Not really important/pertinent to my work or choices.

November 1, 2009

Craft v. Shroyer, 81 Ohio App. 253 (1947) _, 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77

8i Ohio App. 253 Court of Appeals of Ohio, Second District, Montgomery County.

CRAT"T et al. v. SFIROYI;R et al.

July 25~ 1947•

West He~dnotes (23)

[1) Charities ~~ax Nature and requisites in general The doctrine of "cy pres" operates in the field of charitable trusts.

1 Cases that cite this headnote

[2] Charities ~~ Impossibility or impracticability of literal compliance with trust If the court finds that the execution of a testamentary charitable trust is inexpedient or impracticable, a court of equity will execute it, as nearly as it can according to the original plan.

1 Cases that cite this headnote

[3] Charities ~-d General charitable purposes In action for application of cy pres doctrine on testamentary charitable trust which was admittedly impracticable and inexpedient to carry out, the sole remaining issue whether testatrix manifested a general charitable intent was legal rather than factual.

1 Cases that cite this headnote

[4] Appeal and Error ~~ Reception, use, and limitation of use Evidence introduced over objection is regarded as admitted and considered by the court, unless the record affirmatively shows the court sustained the objection.

2 Cases that cite this headnote

[5] Wills - Parol or extrinsic evidence in general Generally where the language of a will is plain and unambiguous, extrinsic evidence is inadmissible to show intention not expressed in the will.

3 Cases that cite this headnote

[6] Wills ~~ Situation and relations of testator and circumstances connected with making of will When the court is in doubt as to the true intention of testator, as expressed by language of the will, evidence as to conditions and surrounding circumstances at time of making will maybe admitted. Craft v. Shroyer, 81 Ohio App. 253(1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77

Cases that cite this headnote

[7] Wills ~~~°-~ Situation and relations of testator and circumstances connected with making of will In action for application of cy pres doctrine to charitable trust, evidence showing discord and differences between testatrix and immediate family of testatrix was irrelevant on issue whether testatrix manifested a general charitable intent.

Cases that cite this headnote

[8] Appeal and Error ~~ Incompetent or immaterial evidence In action for application of cy pres doctrine to charitable trust, admission of evidence showing differences between testatrix and immediate family of testatrix, although irrelevant on issue whether testatrix manifested a general charitable intent, was harmless.

Cases that cite this headnote

[9] Charities ~~~ Actions for administration or enforcement In action for application of cy pres doctrine to charitable trust, failure of trial court to make a finding whether testatrix manifested a general charitable intent would not require reversal if the judgment applying the cy pres doctrine was proper in every other respect.

Cases that cite this headnote

[10] Charities t Nature and requisites in general In the application of the doctrine of"cy pres" to a proper case the court may change the charitable purpose and enlarge the class of beneficiaries, or even designate an entirely new class of beneficiaries.

Cases that cite this headnote

[11] Charities ~°~-~ Nature and requisites in general In a proper case for the application of the doctrine of"cy pres" the court will execute the purpose of settlor as nearly as it can, according to the original plan, if the court finds that the settlor expressed a general intention to give to charity.

3 Cases that cite this headnote

[12~ Charities ~~ Nature and requisites in general The theory underlying the application of the doctrine of cy pres is that the court is doing and fulfilling the will of the testator.

1 Cases that cite this headnote

[13] Charities General charitable purposes The cy pres doctrine will not be invoked where the donor has not expressed his charitable intention generally, but only by providing for one specific particular object which cannot be carried out. Graft v. Shroyer, &1 Ohio App. 253 (1947) __ 74 N.E.2d 589, 49 Ohio Law Abs. 385,37 0.0. 77

Cases that cite this headnote

[14] Charities ~-~ General charitable purposes In action for application of cy pres doctrine on testamentary charitable trust impracticable and inexpedient to carry out, the will would be construed from its four corners in determining whether testatrix had a general charitable intent.

Cases that cite this headnote

[15] Charities ~~~~ General charitable purposes Where, construing will providing for establishment of a home for "full orphans" of a specified church from the four comers, a lack of general charitable intent was shown, the cy pres doctrine would not be applied notwithstanding it was impossible to carry out the terms of the trust.

Cases that cite this headnote

[16] Trusts ~~~ Modification A deviation from terms of a trust will be ordered if it appears to the court that compliance with the terms of the trust is impossible, illegal, impracticable or inexpedient, or that, owing to circumstances not known to the settLor and not anticipated by settlor, compliance would defeat or substantially impair the accomplishment ofthe purposes ofthe trust.

5 Cases that cite this headnote

[17] Charities ~x~~= Nature and requisites in general Charities Judicial supervision or administration The principle permitting a deviation from the terms of a trust in matters relative to the administration of the trust is analogous to but not as extensive as the doctrine of cy pres, and in ordering a deviation the court does not touch the question of the purpose or object of the trust, nor vary the class of beneficiaries, nor divert the fund from the charitable purpose designated.

6 Cases that cite this headnote

[18] Charities ~ Judicial supervision or administration The jurisdiction to vary the details of the administration of a trust is more liberally exercised, more firmly established, and more widely recognized than the cy pres power of the court.

Cases that cite this headnote

[19] Charities ~~~-- Judicial supervision or administration The court is not required to first find a general charitable intent as a prerequisite to the exercise to the power to order a deviation from terms of trust in matters relative to administration of the trust.

Cases that cite this headnote

[20] Charities ~~~ General rules of construction Craft v. Sprayer, 81 Ohio App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 O.O. 77

Charitable trusts have always been favored in equity and should be given a liberal construction to carry out the intenrion of the testator.

Cases that cite this headnote

[21] Charities ~~~_~ Judicial supervision or administration Court of equity had duty to maintain testamentary charitable trust not showing general charitable intent, if possible, even though method or plan of administering the trust would be required to be altered, and a reasonable plan for administration of trust would be devised in order to carry out intention of testatrix, where it was impractical and inexpedient to administer trust in the manner outlined by testatrix and where, due to circumstances not known to testatrix and not anticipated by testatrix, compliance with terms of trust would substantially impair accomplishment of the purposes of the trust.

Cases that cite this headnote

[22] Charities ~~~-- Judicial supervision or administration In deviating from the plan or method of administering a charitable trust which is impractical and inexpedient to administer in the manner outlined by testatrix and, because of circumstances not known to testatrix and not anticipated by testatrix, compliance with the terms of the trust would substantially impair the accomplishment of the purposes of the trust, the court is not permitted to change the charitable purpose nor divert the funds from the charitable purpose designated.

7 Cases that cite this headnote

[23] Charities ~~testamentary trust provided for entire estate of testatrix to be used to establish a home for "full orphans" of a specified church in home of testatrix, but court was required to devise another plan for administration of trust in order to carry out the intention of the testatrix, court of equity, in the exercise of a broad discretion, could authorize the sale of the home, even though the sale was not authorized under the terms of the will.

1 Cases that cite this headnote

Action by Sophie Craft, as executrix of the last will and testament of Susan A. Shroyer, deceased, and others, against Sidney J. Shroyer and others, to construe the will of Susan A. Shroyer, deceased. From an adverse judgment, defendants appeal on law. [Editorial Statement.]

Judgment reversed and remanded with instructions.

Attorneys and Law Firms

**590 *254 Routzohn &Nevin and Miles S. Kuhns, all of Dayton, for plaintiff-appellees.

Baird Broomhall, of Troy, and Iddings, Jeffrey, Weisman &Rogers, of Dayton, for defendants-appellants. Craft v. Shroyer, 81 Ohio App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77

Opinion

*255 WISEMAN,Presiding Judge

This is an appeal on law from the judgment of the Common Pleas Court of Montgomery County. This is an action to construe the will of Susan A. Shroyer, deceased, **591 instituted by Sophie Craft as executrix and the three trustees named in said will, in which the heirs at law of the testatrix are named parties-defendant. The will provided that the entire estate of the testatrix should be used to establish a home for full orphans of the United Lutheran Church in America of Miami County, Ohio, at her old home in said county east of Tipp City, Ohio.

The plaintiffs-appellees alleged in their amended petition that `it is impracticable and inexpedient to execute and carry out the specific terms of said trust as set forth in said will, and it is, therefore, necessary to invoke the doctrine of cy pres in order that the corpus of the trust estate may be applied to the promotion of or merged with the assets of or completely paid over to' the Oesterlen Home for Children of the United Lutheran Church in America, located in Clark County, Ohio, near the city of Springfield.

The defendants-appellants in their answer `admit that it is impracticable and inexpedient to execute and carry out the specific terms of said trust;' deny the right of the plaintiffs-appellees to have the doctrine of cy pres invoked for the reason `that said will does not create a general charitable trust, but that the devise and bequest contained therein is limited specifically and definitely to the use of the home of said testatrix as a strictly private home under the definite, specific, narrow and exclusive terms and conditions provided in said will; that, therefore, said devise and bequest and trust have lapsed and are void and have no effect; and that said property *256 of the testatrix descends as intestate property to the defendants as heirs-at-law and next-of-kin of said testatrix.'

On the issues joined the trial court took testimony on the impracticability and inexpediency of the execution of the trust, according to its ternls. Evidence was also admitted relative to the organization, administration, character and location of the Oesterlen Home; that said Home is supported by the United Lutheran Church and admits children from the states of Ohio, Michigan, Indiana, Kentucky, West Virginia and Tennessee; that under its regulations children may be admitted who are not orphans or who are not affiliated with the United Lutheran Church. Testimony was also admitted showing that the testatrix, during her lifetime, taught children in the lower grades of the public schools of this community; that she was fond of children; that she was a member of the United Lutheran Church; that family differences had arisen between the testatrix and certain members of her immediate family which caused an estrangement.

The trial court found the will created a charitable trust; that it is impossible, impracticable and inexpedient to carry out the terms of the trust; that the purposes of said trust can be served by the Oesterlen Home at Springfield, Ohio; that the doctrine of cy pres should be invoked and that the fund in the hands of the executrix, after the administration of said estate is concluded should be turned over to the Oesterlen Home of Springfield, Ohio, to be used in carrying on the work at that Home.

The defendants-appellants assign as error that the judgment is against the manifest weight of the evidence, and is not sustained by sufficient evidence; thejudgment is contrary to law; the court erred in *257 admission and rejection of evidence; and other errors apparent upon the face of the record. [1] [2] The doctrine of cy pres operates in the field of charitable trusts. If the court finds that the execution of a charitable trust is inexpedient or impracticable, a court of equity will execute it, as nearly as it can, according to the original plan. In Vol. 70. Jur. Page 175, Sec. 38, it is stated:

`The general principle upon which the court acts is that, if the testator has manifested a general intention to give to charity, the faihire of the particular mode in which the charity is to be executed shall not destroy the charity; but, if the substantial intention is charity, the law will substitute another mode of devoting the property to charitable purposes, though the formal intention as to the mode cannot be accomplished.'(Emphasis ours.) Craft v. Shroyer, 81 Ohio App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 O.O. 77

See also Scott on Trusts, Vol. 3, page 2098, Sec. 399; Restatement of the Law of Trusts, Vol. 2, Page 1208, Sec. 399; 14 C.J.S., Charities, § 52, page 514. **592 [3] It is conceded that the will created a charitable trust. In the pleadings it was admitted that it would be impracticable and inexpedient to carry out the terms of the trust. Thus, the sole remaining issue was whether the testatrix manifested a general charitable intent. This was a legal rather than a factual matter. While there was evidence taken on several matters, we fail to understand how the judgment of the trial court can be attacked on the weight of the evidence as the issue drawn was legal and not factual.

[4] Extrinsic evidence was admitted, to which the defendants-appellants interposed an objection. The trial court reserved its ruling. The record does not disclose a ruling at any stage of the case. Evidence introduced over objection is regarded as admitted and considered *258 by the court, unless the record affirmatively shows the court sustained the objection.

[5] [6] It was expressly stated that this evidence was not introduced to explain an ambiguity, but rather to show the intention of the testatrix. The general rule is well established that where the language of the will is plain and unambiguous extrinsic evidence is inadmissible to show intention not expressed in the will. Townsend's Ex'rs v. Townsend et al., 25 Ohio St. 477; Sommers v. Doersam, 115 Ohio St. 139, 152 N.E. 387; Steinbrenner v. Dreher, 140 Ohio St. 305, 43 N.E.2d 283. Vol. 41 O.Jur. page 610, Sec. 478; 94 A.L.R. page 39, Note d.; Ann.Cas.1915B, page 16. However, in some jurisdictions the courts have followed the rule that when the court is in doubt or uncertain as to the true intention of the testator, as expressed by the language of the will, evidence as to conditions and surrounding circumstances may be admitted. This rule is best stated in Vol. 41 O.Jur. page 630, Sec. 498, as follows:

`It may be stated that generally evidence may be received as to any facts known to the testator which may reasonably be supposed to have influenced him in the disposition of his property, and as to all the surrounding circumstances at the time of making the wi1L In other words, the courts do not commonly reject any evidence which in in any fair view may be presumed to have a bearing upon the construction of the will.'

The admission of such evidence does not do violence to the general rule. In the final analysis the court must gather the intention of the testator from the words of the will in light of the conditions and circumstances surrounding the testator at the time of the making of the wi1L A fine statement as to the extent *259 to which this evidence may be considered and the purpose of its introduction is found in Ann. Cas.,1915B, page 11:

`It is self-evident that the words of a document are nover anything but indices to extrinsic things, so that all the circumstances must be considered which go to make clear the sense of the words,—that is, their association with things. Therefore, with reference to every dispute respecting which it can be shown that a knowledge of extrinsic facts can aid in the right interpretation of the will, parol evidence of the facts and circumstances surrounding and concerning the testator, his property, and the claimants of his bounty at the time of, or prior to the time of, making the will, is admissible in evidence, not to add to, vary ar contradict the meaning of the will, but to enable the court to place itself in the situation of the testator add see things as he saw them, and to apply his language as he understood and intended it.'

In Zanesville Canal &Mfg. Co. v. City of Zanesville, 20 Ohio 483, on page 490, the court say:

`If we travel out of the will, however, and take a survey of the position that the testator occupied in respect to the inhabitants of Zanesville, at the time be conceived the generous purpose of making this bequest, every doubt it seems to us must be put at rest. This law permits us to do.'

In Lessee of Worman v. Teagarden, 2 Ohio St. 380, it was held that:

`In construing a will, grammatical accuracy need not be observed and it should be read with a veiw to the situation and circumstances of the testator in reference to the subjects of his dispositions, and the objects of his bounty. Craft v. Shroyer, 81 Ohio App. 253 (1947) _ __ 74 N.E.2d 0589, 49 Ohio Law Abs. 385. 37 0.0...77

`With these collateral aids to a correct interpretation, the will must speak for itself, **593 and the intention *260 of the testator be gathered from what appears on its face.'

In Bowen, Adm'r, v. Kollar, 18 Ohio App. 10, on page 15, the court holds:

`It is proper to look not only to the language of the will, but to the facts surrounding the testator, with which he was familiar at the time of executing the will.'

In Allen, Adm'r, v. City of Bellefontaine, 47 Ohio App. 359, 19] N.E. 896, the court held:

`In determining testatrix' intention, conditions surrounding testatrix at time of execution of will, as well as phrasing of will itself, may be considered.'

See also Fitzgerald v. Bell, Ohio App., 39 N.E.2d 186. [7] [8] However, in the instant case evidence was admitted to show family differences and discord. This evidence did not reach, and had no probative effect on, the sole issue in the case, to-wit: Did the testatrix manifest a general charitable intent? On this issue this evidence was wholly irrelevant and immaterial. It should have been excluded on that ground. We are of the opinion that while this evidence was inadmissible, it was not prejudicial and in no way controlled the judgment of the trial court in its application of the doctrine of cy pres. We find no prejudicial error in regard to the admission or the exclusion of evidence.

[9] The defendants-appellants contend that the judgment of the trial court was contrary to law. It is pointed out that the trial court did not find that the testatrix manifested a general charitable intent. The judgment of the court was silent with respect to a finding on this issue. However, the failure of the trial court to make such a finding would not require a reversal if the judgment in every other respect is proper.

We come to a consideration of the principal question: *261 Did the testatrix manifest a general charitable intent? The will of the testatrix is as follows:

`I, Susan A. Shroyer also known as Susie Shroyer of Bethel Township, Miami County, Ohio do give and bequeath all my real and personal property including any money which I may have at my death to be a home for full orphans of the United Lutheran Church of Miami County, Ohio. By full orphans is meant children whose father and mother are dead under the age of 18 years and who also have no stepfather or stepmother

`Item II. To administer the above property I hereby establish a trusteeship consisting of the minister of the First United Lutheran Church of Troy, Ohio, and the minister of the United Lutheran Church of Tipp City, Ohio and theminister of the United Lutheran Church of Brandt, Ohio. I hereby bequeath to the above named trustees the above property in trust for the purposes mentioned.

`Item III. These trustees are to select the superintendent of the home who must be a member of the United Lutheran Church between the ages of 30 and 50 years of age. His wife is to be matron of the home. This is to be done as soon after my death as possible.

`Item IV. There are to be no signs or inscriptions of any kind placed on the buildings or on the grounds. The home is to be maintained as a strictly private home at the site of my present home east of Tipp City, Ohio. The home is to be kept in good repair in every way at all times. Furnishings are to be kept intact and replaced when needed. The children are to be kept in the home until they reach the age of eighteen years. Each article of my possessions is to be kept on my present property.' [l0] [ll] [12] From the will the court must determine whether the *262 testatrix manifested a general intention to give to charity or expressed an intention which is restrictive and exclusive, and limited to a specific purpose. A line of demarkation between the two classes of cases is not well defined. A research of authorities does not disclose any particular tests which have been applied. 2 Bogert on Trusts, and Tnistees § 436, pages 1307-1312. In the application of the doctrine of cy pres to a proper case, the court is permitted to change the charitable purpose and to enlarge the class of beneficiaries, or even designate Craft v, Shroyer, 81 Ohia App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 O.O. 77 an entirely new class of beneficiaries. Scott on Trusts, Vol. 3, pp. 2098, 2099, 2104. In such case, if the court finds that the settlor expressed a **594 general intention to give to charity, the court will execute the purpose of the settlor as nearly as it can, according to the original plan. The theory underlying the application of the doctrine of cy pres is that the court is doing and fulfilling the will of the testator. Consequently, before the court can find, in the case at bar, that the testatrix manifested a general charitable intent, it must find that the charitable purpose expressed was general and broad enough in its scope to embrace beneficiaries not designated in the trust instrument that the desire to make a charitable gift was primary, and would have been made in all events, and that the particular class benefited was secondary and incidental to the general charitable purpose.

[13] In Pomeroy's Equity Jurisprudence, 5th Ed., Vol. 4, Sec. 1027, page 43, it is stated that:

`Where the donor has not expressed his charitable intention generally, but only by providing for one specific particular object, and this object cannot be carried out,' the doctrine will not be invoked.

See 2 Bogert on Trusts, and Trustees § 436, page 1308

*263 In the instant case, it being impracticable and inexpedient to do that which the testatrix had in mind, can we discover a purpose to do something else of a similar character? We think not. There is nothing to indicate that she intended to make provision, generally, for the care of orphan children: Provision for the care of orphan children generally would seem to include a charity much broader than anything in her contemplation. It appears that the plan and scheme of administration of the trust is such an essential part of the gift that one cannot distinguish any general purpose of charity. We are obliged to hole that this mode of doing a charitable act was the only one the testatrix intended or at all contemplated. [14] [15] Tt~e dominant purpose of the testatrix in the creation of the trust is expressed in the first item of her will in which she provided for the establishment of a home for `full orphans of the United Lutheran Church of Miami County, Ohio.' We cannot gather a general charitable intent from this language. We must not confuse the dominant purpose expressed with a general charitable intent. In the first item of her will, in which she expresses a trust purpose, she has imposed three definite restrictions: First, the trust is restricted for the benefit of `full orphans,' who are defined to be `chi ldren whose father and mother are dead under the age of eighteen years and who also have no stepfather or stepmother;' second, the orphans benefitted must be members of, or connected with, the United Lutheran Church; third, the beneficiaries must reside in Miami County, Ohio. In our opinion, Item I, which embraces the dominant purpose for the creation of the trust, reveals a narrow, restricted and specific charitable intent rather than a general charitable intent. However, if there is any doubt as to whether the testatrix had a general *264 charitable intent as revealed in Item I, all doubt is removed when we consider the other items of the will. The will must be construed from its four corners. The lack of a general charitable intent is reflected and emphasized in the other items of the will wherein the testatrix very definitely places restrictions on the manner in which the trust is to be administered. The testatrix very carefully selects three ministers of three United Lutheran Churches to act as trustees, and provides that the property is bequeathed to them in trust `for the purposes mentioned.' The fact that she appointed three ministers of the United Lutheran Church as hustees, shows her intention to safeguard the administration of the trust for the particular and specific purpose designated. Another restriction which indicates that the intention of the testatrix was narrow and specific is found in Item III, in which she prescribes the qualifications of the Superintendent of the Home. He is required to be a `member of the United Lutheran Church beriveen the ages of thirty and fifth years of age.' Here again the testatrix shows that she has no general charitable intent. Futhermore, as if to remove all doubt about ber intention, the testatrix, in Item N provides that `the home is to be maintained as a strictly private home' and that `there are to be no signs or inscriptions **595 of any kind placed on the buildings or on the grounds.' (Emphasis ours.) She further provides that the home to be established shall be `at the site of my present home east of Tipp City, Ohio.' From this language we do not gather a general charitable intent, but rather an intent to provide for the establishment of a strictly private home, limited in its capacity, different in character from the traditional Orphans' Home. In support of this conclusion, we note other provisions in Item IV, in which the testatrix provides that `furnishings *265 are to be kept intact and replaced when needed.' And further, that `each article of my possessions is to be kept on my present property.' Furthermore, in support of our conclusion that the intention of the testatrix was narrow and specific rather than general, we point out that she restricted the class of beneficiaries to a point where few children could qualify Craft v. Shroyer, 81 Ohio App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77 over a period of years. In view of the limited capacity of the home which she sought to establish, and the narrow, restricted and specific charitable purpose expressed, we can understand why she restricted the class of beneficiaries as she did.

Tt will serve no useful purpose to discuss at length the numerous cases cited in which the cy pres doctrine has been invoked. There are only a few reported cases in Ohio in which the question of a general charitable intent determined the issue. In Bowen, Adm'r, v. Kollar et al., supra, wherein a bequest was left to the Old Folks' Home for men in the city of Kansas City, Missouri. the court, on page 15, of 18 Ohio App. held:

`It is apparent that he did not intend that any of his property should go for the maintenance of any persons except old men, and it does not appear that any of the charities which are making claim for this fund have any provisions for separation of the funds which they control so that a portion has been, or may be, used for the benefit of women, exclusively, and another portion for the benefit of men, exclusively.'

In Ward v. Worthington et al., 28 Ohio App. 325, 162 N.E. 714, where the testatrix gave her residence property to a church to be used as a parsonage for said church, and provided that the portraits of her husband, mother and daughter, and a clock, should remain in a proper place in said residence, the court, on page 334 of 28 Ohio App., on page 717 of 162 N.E., say:

`We do not find in this will any general charitable *266 intent. The lack of such intent is emphasized by the specific provisions relative to the family portraits.'

In the case at bar the testatrix provided that her furnishings and each article of her possession should be kept intact on the property.

In Allen, Adm'r, v. City of Bellefontaine, et al., supra wherein the testatrix gave her home to be used by physicians as a meeting place and for research, and as a private lying-in hospital, and at the time of the execution of her will there was in existence a local public hospital, the court, on page 37.1 of 47 Ohio App., on page 901 of 191 N.E., say:

`As the Mary Rutan Hospital was in existence at the time of the execution of the will, it would appear that it was the intention of the testatrix not to adopt that hospital as the beneficiary of her bounty, but to create an institution separate and distinct from the furnishing services of a different class and character from those furnished by such hospital.'

In adopting this reasoning, and applying it to the facts in the instant case, we hold that since the testatrix was a devoted member of the United Lutheran Church, and the Oesterlen Home, which is located within a few miles of her home, was in existence at the time of the execution of the will, and its work and needs were widely publicized among the members of the church, it would appear that it was the intention of the testatrix not to adopt that Home as the beneficiary of her bounty, but to create an institution separate and distinct from, and furnishing services of a different class and character from those furnished by such Home.

In Heinlein v. Elyria Say. & Tr. Co., 75 Ohio App. 353, 62 N.E.2d 284 where the testator in his will provided for the creation and maintenance of two small parks upon two designated plots of ground within the corporate limits of Elyria, *267 and where the Ciry of Elyria sought the application **596 of the doctrine of cy pres and an order of the court to use said funds for the care and maintenance of an old and established park within the corporate limits, the court refused to invoke the doctrine of cy pres, and required the creation of the parks under the terms of the will. The court, on page 362 of 75 Ohio App., on page 289 of 62 N.E.2d, say:

`Suffice it to say, however, that the record before us does not show that the testator, in the giving away of his property, had a general charitable or benevolent intent. A reading of the will exhibits a clear and unqualified expressed intention to restrict his gift, and the use of particular property for a particular, specified purpose. It was no part of his plan, in the event of the failure of the charity, which he so meticulously arranged, that that part of his estate should be used in any other manner. The purpose and intent of the testator, we believe, is not left to inference or doubt. His choice of location and improvement was a vital one, and he had no secondary or broader plan.' Craft v. Shrayer, 81 Ohio App. 253 (1947) _ _ _ 74 N.E.2d 589,..49 Ohio Law Abs. 385,.37 0.0..77

Our search has revealed no language which can be applied with more force to the facts in the instant case than the language used by Judge Doyle in the case of Heinlein v. Elyria Say. & Tr. Co. An examination of the authorities and statements of recognized writers on charitable trusts reveals that the courts are more disposed to find a general charitable intention when the trustputpose benefits the public at large. In the case just cited the establishment of parks was for the public benefit, and yet the court found, from the language used, that there was no general charitable or benevolent intent expressed.

A consideration of a few cases in other states shows that courts of our state are in accord with the ruling which prevails in other jurisdictions. In Penick v. Thom's Trustee, 90 Ky. 665, 14 S.W. 830, *268 where a legacy was left to a trustee for the use and benefit of `The Orphans' Home of the Episcopa. Church of the Ascension in Frankfort,' the court, on page 831 of 14 S.W., say:

`It was not the intention of the testator to make any (ofl other disposition of this fund than that contemplated by the devise.

`That this was not a devise to orphans, generally, will be admitted, but that it was a devise to orphans connected with or under the care and patronage of the Episcopal Church in Frankfort is manifest. He connects the Home by the devise with his church, calling it `The Orphans' Home of the Episcopal Church of the Ascension in Frankfort;' places it under the control of the rector of that church, with the power in the latter to appoint his successor;

A similar provision is found in the will of our testatrix, in which she provides that the trust shall be administered by three ministers of three congregations of the United Lutheran Church, of which she is a member.

In McBride et al. v. Murphy et al., 14 De1.Ch. 242, 124 A. 798, where the testator gave his property to a charitable corporation to be used `for the support and maintenance of the orphan girls under its care and charge,' and such corporation ceased to exist before the testator's death and an effort was made to give this fund to another similar institution, the court, on page 802 of 14 Del.Ch., on page 802 of 124 A., say:

`In the first place there is nothing in the will which shows that the class of persons intended by the testator to be the objects of his bounty was `female Catholic orphans of the diocese of Wilmington,' as stated by the solicitor for the defendants. It may have been and doubtless was true that the corporation named drew from this class in selecting the particular *269 orphans whom it would maintain and support. It is stated that the testator knew this. If he did, he nevertheless chose language which confined his bounty to those only of the class who happened to be in the care and charge of the specifically named corporation. It is difficult to see how an interest could at any time have been asserted on behalf of any orphan children who were not at the time in the care and charge of this institution.'

On page 803 of 14 DeLCh., on page 803 of 124 A., the court say:

**597 `It cannot make any difference whether Che gift was to the charitable institution absolutely, or upon trust to use it for the benefit of the particular class of individuals to whom it administers its aid. In neither case can a general charitable intent be inferred.'

In Chicago Daily News Fresh Air Fund v. Kerner, 305 I11.App. 237, 27 N.E.2d 310, where the testator bequeathed a part of his residuary estate to a specific charity by name, and the charity renounced the bequest, the court held the cy pres doctrine was not applicable to give the property to another charity of a similar character. The court, on page 242 of 305 IlI.App., on page 312 of 27 N.E.2d, approved a former opinion which held that: `General charitable intent cannot be deduced from the sole fact that the organization named in the will is engaged in a particular charitable work.' The court, on page 242, of 305 TILApp., on page 313 of 27 N.E.2d, in approving the former opinion, stated:

`We sustained this, saying that a general charitable intent to benefit needy boys and girls, generally, cannot be deduced from the sole fact that the Chicago Waifs Mission and Training School was engaged in charitable work for needy boys and girls. We there said ([Quimby v. Quimby], 175 IILApp. [367], at 313, page 373) that the doctrine of cy pres should be applied `if the bequest is to a cause or for a purpose ar *270 to aid and further a plan or scheme of public benefit,' for then there is evidence Craft v. Shroyer, 81 Ohio App. 253(1947) _ _ __ 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77 of a general charitable intent. But where the gift is not to any cause, plan or scheme of charity, but to a specific or particular organization, no general charitable intent by the testatrix is indicated and the doctrine of cy pres does not apply.'

In Waterbury Trust Co. v. Porter, 131 Conn. 206, 38 A.2d 598, where the testator left the residue of his estate to trustees to establish a school or college to be operated according to a plan laid down in the will, and where the fund was not adequate to carry out this purpose and the trustees requested that the fund be used for the purpose of erecting a Trade School Building, the court held that there was no general charitable intent expressed. The court in that case had under consideration the application of the doctrine of `approximation,' which was considered in the same manner as the doctrine of cy pres. The court, on page 215, of 131 Conn., on page 603 of 38 A.2d, say:

`It may be employed only where, upon the failure of the trust, the court finds in the terms of the will, read in the light of the surrounding circumstances, a general intent to devote the property to a charitable use to which the intent that it go to the particular purpose named is secondary.'

The court, on page 216 of 131 Conn., on page 603 of 38 A.2d, say:

`But the restrictions he imposed, including that as to the site of the school upon his ancestral land, are couched in language too strong to be ignored. His will is, in effect, an order to carry out his educational program and none other. Because of the absence of a general charitable intent, the doctrine of approximation is not applicable.'

In Rohlff v. German Old People's Home, 143 Neb. 636, 10 N.E.2d 686, on page 690, where the testator made a bequest *271 to a Home for old people of German descent to be erected, and which was never built, the court say:

`It is evident to us upon an examination of plaintiffs' petition that the testator made the gift by his will for the purpose of assisting aged people of German extraction in the city of Omaha by aiding in building and maintaining a home for that purpose. The gift was for charity, with a narrow trust intent. The provision in the will indicates no general charitable intent.'

The authorities are legion where the courts in construing wills containing trust provisions, much more general in character than in the will of the testatrix, have found no general charitable intent. When we consider the trust provisions of the will under consideration, in the light of the authorities on this subject, we are led to conclude that the gift was for charity with a narrow trust intent. We cannot conceive of a will being drafted establishing a trust which would contain more restrictions and a more narrow and specific intent than that found in the will of the testatrix. In our **598 judgment, the testatrix did not manifest a general charitable intent to aid orphans, generally, but rather expressed an intention which is restrictive, exclusive and specific in its purpose. The absence of a general charitable intent precludes the application of the doctrine of cy pres. Heinlein v. Elyria Say. & Tr. Co., supra; Bowen, Adm'r, v. Kollar, supra. [16] Does the corpus of the trust estate descend as intestate property to the defendants-appellants as the only heirs-at-law of the testatrix? In their petition plaintiffs not only pray for the application of the doctrine of cy pres, but also for general equitable relief. Thus the general equity powers of the court are invoked. It is contended by plaintiffs-appellees that a court of equity *272 may, to a limited extent, permit a modification of the trust in order to prevent a failure of the trust purpose. The court will order a deviation from the terms of the trust if it appears to the court that compliance with the terms of the trust is impossible, illegal, impracticable or inexpedient, or that owing to circumstances not known to the settlar and not anticipated by him, compliance would defeat or substantially impair the accomplishment of the purposes of the trust. Findley v. Conneaut, 145 Ohio St. 480, 486, 62 N.E2d 318; Restatement of the Law of Trusts, Vol. 2, page 1176, Sec. 381; Scott on Trusts, Vol. 3, Secs. 381, 399. In such cases the court applies the rule or doctrine of deviation. In Findley v. Conneaut, supra, 145 Ohio St. on page 486, 62 N.E.2d on page 322, the court say:

`In some cases, under proper circumstances, the doctrine of deviation has been applied; in other cases, where the facts and circumstances warranted, the doctrine of cy pres has been invoked. However, the doctrine of deviation or of cy pres has been applied only in cases where exact compliance with the provisions of the will would defeat or substantially impair the accomplishment of the purposes of the trust.' Craft v. Shroyer, 81 Ohio App. 753 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0.77

[17] [18] [19] We must distinguish between the application of the doctrine of cy pres and an analagous but not as extensive a principle which permits a deviation from the terms of the trust in matters relative to the administration of the trust. See Restatement of the Law of Trusts, Vol. 2, page 1208. The cy pres doctrine is a rule of judicial construction under which the court is required to first find a general charitable intent in the instrument creating the trust; the general charitable purpose of the settlor moves the court to substitute a different charitable purpose for the one which has failed. Cy pres is applied only in the field of charitable *273 trusts, whereas, a court of equity may order a deviation in private as well as charitable trusts. See Restatement of the Law of Trusts, Vol. 2, pages 1176, 1208. In ordering a deviation a court of equity is merely exercision its general power over the administration of trusts; it is an essential element of equity jurisdiction. In ordering a deviation the court does not touch the question of the purpose or object of the trust, nor vary the class of beneficiaries, nor divert the fund from the charitable purpose designated. 7 O.Jur. Sec. 42, page 185. The cy pres doctrine requires the exercise of a more extensive power than the ordinary power of a court of equity in ordering deviation. See Scott on Trusts, Vol. 3, page 2100, Sec. 399; Restatement of the Law of Trusts, Vol. 2, pages 1208, 1209. The jurisdiction merely to vary the details of the administration of a trust is more liberally exercised, more firmly established and more widely recognized than the cy pres power of the court. Vol. 14 C.J.S., Charities, § 50, page 511. Thus, we are dealing here with the manner of the administration of the trust as distinguished from the purpose of the trust. As a prerequisite to the exercise of the power to order a deviation the court is not required to first find a general charitable intent.

In Vol. 7 O.Jur. Sec. 42, page 184, the rule which permits a court of equity to deviate from the terms of the trust relative to its administration is stated, and in the footnote reference is made to the case of Gearhart v. Richardson, 109 Ohio St. 418, on page 435, 142 N.E. 890, on page 895, where the court say

`We think the rule to the well established in this country, in construing charitable trusts, that if the founder thereof describes **599 in the instrument by which he creates the charitable trust the general nature thereof and names the class of beneficiaries, he may *274 leave the details of its administration to be settled by the trustees, under the guidance of a court of equity (In re Upham's Estate, 127 Cal. 90, 59 P. 315), and that where exact conformity to the plan of the person who has provided by his will for the charitable trust cannot be carried out in exact detail such object will be attained and duty performed with as close approximation to the original plan as is reasonably practicable, provided the same is in conformity and consistent with the charitable purposes named by the founder; that, at least, a court of equity will not permit such charitable trust to fail because of some slight deviation or change from the original plan, if the general purpose named by the creator of the trust is sti11 attained.' (Emphasis ours).

In that case the court,.109 Ohio St. on page 434, 142 N.E. on page 895, stated the issue presented:

`All must concede the clearness of the charitable purpose of the testator, but the difference arises over the trust's administration.'(Emphasis ours.)

The syllabus in that case holds that the trust would be enforced regardless of `a small change incident to the method of administration, which does not alter the purpose or object of the trust, nor vary the class of beneficiaries, nor divert the fund from the charitable purposes named by the donor.' See also McIntire's Adm'rs et al. v. City of Zanesville, 17 Ohio St. 352; Carr et al. v. Trustees of Lane Seminary et al., Com.PL, 2 Ohio Supp. 316. [20] [21] In the instant case the testatrix, in the first paragraph of her will, manifested very clearly her intention to create a charitable trust, the beneficiaries of which should be `full orphans of the United Lutheran Church of Miami County, Ohio.' Charitable trusts have always been favored in equity, and should be given a liberal construction to carry out the intention *275 of the testator. Zanesville Canal &Manufacturing Co. v. City of Zanesville, 20 Ohio 483; Landis, Urmey's Ex'r v. Wooden et al., 1 Ohio St. 161, 164, 59 Am. Dec. 615; Palmer v. Oiler, Ex'x, 102 Ohio St. 271, 131 N.E. 362; Gearhart v. Richardson, 109 Ohio St. 418, 142 N.E. 890; Findley v. Conneaut, 145 Ohio St. 480,486, 62 N.E.2d 318; Graham v. Bergin, 18 Ohio App. 35. It is admitted that it is impracticable and inexpedient to administer the trust in the manner outlined by the testatrix and that due to circumstances not known to her, and not anticipated by her, compliance with the terms of the trust would substantially impair the accomplishment of the purposes of the trust. However, it is the duty of the court to maintain this trust if at all possible even Craft v. Shroyer, 81 Ohio App. 253 (1947) 74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 0.0. 77 though the method or plan of administering the trust must be altered. A court of equity will devise some other reasonable plan for its administration in order tocarry out the intention of the testatrix.

[22] In deviaring from the plan or method outlined by the testatrix, the court is not permitted to change the charitable purpose nor divert the funds from the charitable purpose designated in the will. Scott on Trusts, Vol. 3, page 2099, Sec. 399. In the instant case we are of the opinion that a court of equity, in the exercise of a broad discretion in the administration of this trust, may make an order which will not change the original charitable purpose nor divert the funds from the charitable purpose designated in the will. In the exercise of its discretion the trial court should have made an order: Requiring the trust to be maintained for the benefit of full orphans of the United Lutheran Church of Miami County, Ohio; to require the trustees named in the will to preserve and invest the trust funds and to hold said trust funds for such trust purpose only; to expend *276 such trust funds for the care, maintenance and support of full orphans of the United Lutheran Church of Miami County, Ohio, as defined by the will of the testatrix, during their residence in the Oesterlen Home near Springfield, Ohio, or any other similar institution, or any private home.

[23] In the administration of the trust it may become necessary to sell the home of the testatrix which she intended should be used as a private home for such orphans, **600 or other property in the trust. A court of equity, in the exercise of a broad discretion, may authorize the sale of such property, even though the sale is not authorized under the terms of the will. See Scott on Trusts, Vol. 3, Sec. 381, page 2044.

In our opinion the judgment of the trial court was contrary to law and is hereby reversed. We find no other error apparent on the face of the record. The court orders this case remanded to the lower court with instructions to make the order which it should have made and in conformity to the ruling and holding of this court.

MILLER, J., concurs.

HORNBECK, J., concurs in judgment.

Parallel Citations

74 N.E.2d 589, 49 Ohio Law Abs. 385, 37 O.O. 77

Ci:Ett1[w1~6)EreiF~~tc•nt ~.~~'.f~14",.- ~ F' [~•r7.~~~.t~ri

§ 399Failure of Particular Purpose Where Settinr Had..., Restatement (Second)...

Restatement(Second) of Trusts § 399 X1959)

Restatement of the Law -Trusts

Database updated March 2oi4 Restatement(Second) of Trusts

Chapter ll. Charitable Trusts

Topic 5. Failure of Charitable Trusts The Doctrine of Cy Pres

§ ;;yy Failure of Particular Purpose Where Settlor Had Ueneral CharitaUle Intention. The Doctrine of Cy Pres

Comment: Reporter's Notes Case Citations - by Jurisdiction

If property is given in trust to be applied to a particular charitable Purpose, and it is or becomes impossible or impracticable or illegal to carry out the particular purpose, and if the settlor manifested a more general intention to devote the property to charitable purposes, the trust will not fail but the court will direct the application of the property to some charitable purpose which falls within the general charitable intention of the settlor.

See Rgporter's Note.

Comment:

a. The doctrine ofcypres. The principle stated in this Section is called the doctrine of cy pres. The expression indicates the idea that where the exact intention of the settlor is not carried out, his intention is carried out "as nearly as" may be. The doctrine is not applicable to private trusts, although there is an analogous but not as extensive a principle, which is applicable to private tntsts (see § 167) as well as to charitable trusts (see § 381), permitting a deviation from the terms of the trust in matters relating to the administration of the host where compliance is impossible or illegal or where owing to circumstances not known to the settlor and not anticipated by him compliance would defeat or substantially impair the accomplishment of the purposes of the trust. There is also a somewhat analogous principle applicable to private trusts for the members of a class of persons among whom the trustee is authorized to select which of the members shall take and in what proportions, where if the trustee fails to make the selection, the trust does not fail but the trust property is divided among the members of the class in equal shares. See §§ 120, 121. In these cases the whole of the intention of the settlor cannot be carried out, but the trust nevertheless does not fail since the primary intention of the settlor can be accomplished. Compare the similar principles applicable to charitable trusts where the trustee fails to exercise a power of selection among two or more charitable objects. See § 397, Comment h, or where he fails to exercise a power of selection among charitable and other valid objects (see § 397, Comment 1~, or where he fails to exercise a power of selection among charitable and invalid objects. See ~ 398.

The doctrine of cy pres goes beyond these principles. Under this doctrine, which is peculiar to charitable trusts and charitable corporations, the court permits or directs the application of the trust property to a different charitable purpose from that designated by the settlor, under the circumstances stated in this Section.

b. To what purposes the property may be applied In the application of the cy pres doctrine, it is sometimes stated that the property must be applied to purposes as nearly as possible like those designated by the terms of the gift. To an increasing extent, however, the courts have recognized that in choosing among possible schemes the court is not necessarily required to adopt that § 399Failure of Particular Purpose Where Settlor Had..., Restatement (Second)... scheme which is as nearly as possible like that designated by the terms of the gift. This is particularly tnie where the designated purpose becomes impossible or impracticable of accompl ishment at some time subsequent to the creation of the trust. The court seeks to frame a scheme which on the whole is best suited to accomplish the general charitable purpose of the donor.

c. Specific provisions in the terms of the trust. If property is given in trust to be applied to a particular charitable purpose, and it is provided by the terms of the trust that if the purpose should fail the trust should terminate, the property will not be applied cy pres on the failure of the particular purpose, since the terms of the trust negative the existence of a general charitable intention. In such a case there will be a resulting trust for the settlor or his estate, unless there is a valid gift over. See § 413. This is true whether the provision as to the duration of the charitable trust is in the form of a limitation (see § 401, Comment c), or in the form of a condition subsequent. See § 401, Comment d.

The mere fact, however, that it is provided by the terms of the trust that the property shall be devoted "forever" to a particular purpose, or that it shall be devoted to that purpose "and no other purpose", or that the property is given "upon condition" that it be applied to that purpose, does not necessarily indicate the absence of a more general charitable intention of the settlor; it may merely emphasize the intention of the settlor that the property should not be applied to other purposes as long as it is possible and practicable and legal to apply it to the specified purpose, and does not necessarily indicate an intention that the trust should terminate if it should become impossible or impracticable or illegal to carry out the particular purpose.

d. Framing a scheme. Under the circumstances stated in this Section, the court will direct the framing of a scheme to apply the trust property for some charitable purpose falling within the general charitable intention of the settlor. In framing a scheme the court will consider evidence as to what would probably have been the wish of the settlor at the time when he created the trust if he had realized that the particular purpose could not be carried out. The court will consider not only the language of the trust instrument, but also such circumstances as indicate what would have been the probable desires of the settlor, such as the character of the charitable gifts previously made by him, the charities in which he had expressed an interest, his religious affiliations, his views on social, economic and political questions, and the like.

Where a testator bequeaths money in trust to establish and maintain a particular kind of institution in a particular town, and it is impracticable to establish the institution in the town, because a similar institution has been established in the town and it would be impracticable to maintain two such institutions, the court must first determine whether the testator manifested an intention to restrict his bequest to the particular purpose specified, in which case the intended charitable trust fails. If the testator did not manifest anintention so to restrict his bequest, the question then arises as to the scope of his general charitable intention. If it appears that his primary intention was to promote the purposes to which an institution of the character specified is devoted, the court may direct the trustees to erect and maintain a similar institution in another town. If it appears that his primary intention was to assist the town, the court may direct the trustees to apply the property to other charitable purposes in the town.

In the United States the power to frame schemes is in the courts. In England such power is conferred upon the Charity Commissioners, or, in the case of educational endowments, upon the Ministry of Education, subject in both cases to appeal to the courts.

There is some authority to the effect that the legislature of a State may by special act apply the cy pres doctrine to specific charities. If it has such power, it is a power to permit the trustees, and not to compel them, to deviate from the terms of the trust.

As to the framing of a scheme where property is left for such charitable purposes as the trustee may select, and the trustee makes no selection, see § 397, Comment c.

As to the framing of a scheme where property is left directly to charity without naming a trustee, see § 397, Comment e.

e. Approval of the court. If property is given in trust to be applied to a particular charitable purpose which fails, the trustees cannot properly apply the property to some charitable purpose even though that purpose falls within the general charitable § 399Failure of Particular Purpase Where Settlor Had..., Restatement (Second}... intention of the settlor, but they should apply to the court and the court will determine the purpose to which it should be applied. If the trustees have so applied it without the direction of the court, they are subject to liability for breach of trust; but if the application made by the trustees is such as the court would have directed, the court may approve the application, and such approval will be as effective as though the court had authorized the application before it was made. Compare § 167, Comment f. f. Consent of Che trustees. The doctrine of cy pres maybe applied without the consent of the trustees. Ordinarily, it is true, when the trustees find that it is impossible or impracticable to comply with the terms of the trust, they apply to the court, asking the court to frame a scheme for the application of the property. But such an application to the court may be made by the Attorney General or by other persons who have an interest under the trust. The court may apply the doctrine of cy pres and frame a scheme even though the trustees do not consent to the scheme. Of course the court will usually give weight to the wishes of the trustees. g. Consent of the donor. The doctrine of cy pres may be applied without the consent of the donor. The court will naturally give weight to the wishes of the donor, but his wishes are not determinative, unless he has reserved power to modify the trust. See § 367. In a few States, it is provided by statute khat an applicarion of the property cy pres shall not be made without the consent of the donor if living and not under an incapacity. h. Judicial and prerogative cy pres. At common law in England when property is given for a purpose which is illegal but which except for such illegality would be charitable, or when property is given simply to charity, without indicating further the character of the purpose and without indicating that a trustee is to administer the charity, it was held that it is within the prerogative power of the Crown to direct the application of the fund to some charitable purpose. In other cases where property is given for charitable purposes, the power to apply the property cy pres was in the Chancellor, and was exercised in accordance with the rule stated in this Section. The prerogative power might be exercised without regard to the intention of the settlor; but the judicial power was exercised only with a view to the carrying out of the general intention of the settlor. The prerogative power does not exist in the United States; it cannot be exercised even by the legislature, although the legislature can enact general rules as to the extent and the exercise of the judicial power of the court to apply cy pres property which is given for charitable purposes.

In the United States if property is given simply to charity, the courts will direct the application of the property to charitable purposes (see § 397, Comment e), although in England in such a case the application was directed by the Crown. i. Initial and subsequentfailure ofparticular purpose. If property is given in trust to be applied to a particular charitable purpose, and at the time when the property is given it is possible and practicable and legal to carry out the particular purpose, but subsequently owing to a change of circumstances it becomes impossible or impracticable or illegal to carry out the particular purpose, it is easier to find a more general charitable intention of the settlor than it is where the particular purpose fails at the outset. The court can fairly infer an expectation on the part of the settlor that in course of time circumstances might so change that the particular purpose could no longer be carried out, and that in such a case the settlor would prefer a modification of his scheme rather than that the charitable trust should fail and the property bedistributed among his heirs who might be very numerous and only remotely related to him. The courts are therefore more ready to apply the doctrine of cy pres where the particular purpose fails at some time after the creation of the trust than they are where the particular purpose fails at the outset.

As a matter of public policy it might well be held that in the case of a subsequent failure of the parricular purpose the doctrine of cy pres should always be applied and that the property should never revert to the settLor or his estate. The longer the period between the creation of the charitable trust and the failure of the particular purpose, the more undesirable it is that the property should revert to the settlor's estate. It is to be borne in mind that the rule against perpetuities is not applicable to this situation, and the reverter might take place long after the period of the rule against perpetuities. It might, indeed, well be held that even an express provision in the terms of the charitable trust that if the particular purpose should fail the property should revert to the settlor or his estate (see Comment c) should be subject to the rule against perpetuities. A statute might be advisable fixing a definite period of years, such as thirty years, after which there should be no reverter to the settlor or his estate. i § 399Failure of Particular Purpose Where Settlor Had..., Restatement (Second}...

j. Causes for failure ofpurpose—Amount insufficient If property is given in trust for a particular charitable purpose and the amount given is so small that it is impossible to accomplish the purpose with the amount so given, the intended trust fails if, but only if, the settlor manifested an intention to restrict his gift to the particular purpose which he specified. Thus, if a testator bequeaths the residue of his estate in trust to erect a hospital and the amount of the residue proves to be insufficient for the purpose, the court will direct the application of the fund to the endowment of a ward in an existing hospital, or otherwise for the promotion of health, unless the will as interpreted in the light of all the circumstances indicates that the testator intended to restrict his gift to the establishment of a hospital and had no general intention to aid thesick.

If the amount required for the particular purpose does not greatly exceed the amount given, the court may direct an accumulation of the income until the amount becomes sufficient. Ordinarily, however, the court will not direct such an accumulation in the absence of a direction to accumulate in the terms of the trust. As to the validity of such a direction, see § 401, Comment 1. k. Same—Particular purpose already accomplished. If property is given in trust to be applied to a particular charitable purpose, and the purpose has been accomplished, the intended charitable trust does not necessarily fail and the court may direct the application of the property under the doctrine of cy pres.

Thus, where a testator, who died before slavery was abolished in the United States, bequeathed money in trust to be expended for the circulation of books and delivery of lectures or otherwise as in the judgment of the trustee would create a public sentiment that would put an end to negro slavery in the United States, and slavery in the United States was abolished by an amendment to the Constitution, the court may direct the application of the bequest to the promotion of the interests of former slaves.

So also, where a testator, who died before the adoption of the Eighteenth Amendment to the Constitution of the United States, bequeathed money in trust to be expended to promote the prohibition by law of the manufacture and sale of intoxicating liquor, the trust did not necessarily fail as a result of the adoption of the Amendment, and before the repeal of tl~e Amendment the court might have directed the application of the property to the promotion of temperance by other methods, unless the testator manifested an intention to restrict his gift to the single purpose of establishing prohibition by law. Even if the testator manifested an intention to promote temperance only by prohibition by law, the court might have directed the application of the property to aid in the opposition to repeal of constitutional and statutory prohibition, or when such repeal was effected to aid in the re- establishment by law of prohibition.

So, also, where a testator bequeaths property in trust to establish a hospital in a town, and a similar hospital has been established in the town and no useful purpose would be accomplished by having two hospitals, the court will direct the application of the property cy pres if the testator had a more general charitable intention, as for example by making other provisions for the sick in the town, or by establishing a hospital elsewhere. If, however, the testator manifested an intention to restrict his gift to the particular purpose of establishing a hospital in the town, and the purposes which would thereby be accomplished are fully accomplished by the establishment of the other hospital, the trust fails and a resulting trust will arise for the testator's estate.

As to the application of the surplus where the particular purpose is fully accomplished by the application of a part of the trust property, see § 400.

1. Same—Lack ofnecessary consent If property is given in trust to be applied to a particular charitable purpose, and the purpose cannot be carried out without the consent of a third person, and the third person refuses to consent, the intended charitable trust fails if, but only if, the settlor manifested an intention to restrict his gift to the particular purpose.

Thus, if a testator bequeaths property in trust to erect a public library in a town provided that the town should agree to accept it and to maintain it, and the town refuses to do so, the property may be applied cy pres for the purpose of supplying the people in the town with reading matter, if such purpose falls within the general charitable intention of the testator, but not otherwise. § 399Failure of Particular Purpose Where SetUor Had..., Restatement (Second)...

So also, if a testator devises a building in trust to use it as a church or chapel or parsonage, provided that the proper church authorities consent to accept it, and the church authorities refuse to accept it, the property may be applied cy pres for other religious purposes if the testator had such a general charitable intention, but not otherwise. m. Same—Useless purposes. Where the purpose for which an intended trust is created is of no value at all to the community, the trust is not enfarceable. Thus, if a testator provides for the publication of his literary or scientific writings, and the writings are of no value, the intended trust ordinarily fails. But if the testator had a more general charitable purpose to promote education, the doctrine of cy pres will be applied.

So also, if a purpose which was at the time of the creation of the trust regarded as of benefit to the community in course of time comes to be regarded as useless or even harmful to the community, the doctrine of cy pres maybe applied. Tbus, if the testator leaves property in trust to use the income in distributing money among poor persons, the court may apply the doctrine of cy pres by framing a scheme for a different method of benefiting the poor. n. Same—Illegality. A disposition for charitable purposes may fail, in whole or in part, either at the outset or subsequently, because the purposes or some of them are or become illegal. In such a case the doctrine of cy pres is applicable unless the settlor manifested an intention that the property should be applied solely to the purpose which is or has become illegal.

o. Gift to corporation or association. If a testator devises or bequeaths property to a charitable corporation or association which refuses to accept the devise or legacy, or which is incapable of taking or holding it, or which is not in existence, the disposition will not fail if the testator manifested an intention to devote the property to charitable purposes and not merely to make a gift to the particular corporation or association. See § 397, Comments f, g. Thus, if the testator bequeaths money to a particular university to establish a course in eugenics in which certain doctrines should be taught, and the university refuses to accept the legacy, the court may permit the legacy to be applied to the establishment of such a course in another university, unless the settlor manifested an intention to restrict his gift to the university which he named.

If a testator devises or bequeaths property to a charitable corporation or association byname, and no corporation ar association of that name exists, extrinsic evidence is admissible to show his intention to make the devise or bequest to a corporation or association with a different name.

If gifts are made to a charitable corporation which is subsequently dissolved, the doctrine of cy pres will be applied, and the court may direct that the property be given to another corporation or association having similar purposes, at least if it is not otherwise provided by the terms of the gift. There are statutes in several States which expressly so provide.

If property is given in trust to be applied for the support of a particular charitable institution, and the institution subsequently merges with another institution established for similar purposes, the court will permit the application of the property for the new institution, unless the settlor manifested an intention to restrict his gift to the institution which he named.

p. Where the site ofthe charityis or becomes impracticable. If a settlor transfers land in trust to maintain a charitable institution upon the land, and at the time of the creation of the trust it is, or owing to a change of circumstances it becomes, unsuitable for the maintenance of the institution, the court may direct or permit the trustees to sell the land and devote the proceeds to the erection and maintenance of the institution on other land, even though the settlor in specific words directed that the land should not be sold and that the institution should not be maintained in any other place. In so directing the court is not necessarily resorting to the doctrine of cy pres, since under its general power over the administration of trusts it can permit deviations from the terms of the trust of this character. See §§ 167, 381. The court will not, however, permit the removal of the institution if the settlor provided that the trust should continue only so long as the institution should be maintained on the land ar that the trust should terminate if the institution were not maintained on the land. See Comment c. § 399Failure of Particular Purpose Where Settlor Had..., Restatement (Second)... g. Where accomplishment ofparticularpurpose is notimpossible. The doctrine of cy pres is applicable even though it is possible to carry out the particular purpose of the settlor, if to carry it out would fail to accomplish the general charitable intention of the settlor. In such a case it is "impracticable" to carry out the particular purpose, in the sense in which that word is used in this Section. This is particularly likely to be the case where there has been a change of circumstances after the creation of the trust. See Comment i.

Thus, if a testator bequeaths property in trust to establish and maintain an insritution of a particular kind, and owing to the fact that a similar institution already exists, or is subsequently created, so that to establish or to maintain the institution as directed by the testator would serve no useful purpose, the court will not compel the trustee to establish or maintain the institution.

So also, if a settlor establishes a school and directs that certain subjects only shall be included in the curriculum, and in course of time this restriction prevents the school from affording a proper education, the court will permit changes in the curriculum.

So also, the directions of the settlor with respect to the mode of government ar the conduct of an institution created by him may be dispensed with by the court, where these directions seriously impede the usefulness of the institution.

In England and Scotland in the field of education the doctrine of cy pres has been greatly enlarged by statute. Deviations from the terms of the gift are permitted even though it is not impossible or impracticable to carry out the particular directions of the donor. Emphasis is placed on the welfare of the student and of the community rather than on the precise directions of the donor. In framing schemes for the application of educational endowments, consideration is given to the spirit of the intention of the donor rather than to his precise directions. r. Several settlors. If several persons contribute to a fund to be applied to a particular charitable purpose, and it is or becomes impossible or impracticable or illegal to carry out the particular purpose, and if the doctrine of cy pres is not applicable, a resulting trust will arise in favor of the contributors, and if a part of the fund has been exhausted the contributors will be entitled to share in the balance in proportion to their contributions. If some of the contributors cannot be ascertained, there will be a resulting trust of their shares for the State. See § 413.

Reporter's Notes

Comment a. The doctrine ofcy pres.

In several States there are statutes embodying the doctrine of cy pres. AIa.Code 1940, tit. 47, ~ 145; Ga.Code Ann. ~§ 108-202, 113-815; La.Laws 1954, c. 592; Md.Ann.Code, art. 16, § 295; Minn.Stat.Ann. § 501.12; N.Y. Personal Property Law, § 12(2); Real Property Law, § 113(2); Pa.Stats.Ann.(Purdon) tit. 20, § 301.10; R1.Gen.Laws 1956, § 18-4-1; S.D.Laws 1955, c. 429, p. 505; Vt.Stats.1947, § 1282; Va.Code 1950, § 55-31; W.Va.Code, § 3502; Wis.Stats. §§ 231:11(7), 323.025.

In some ofthese statutes, as in Minnesota, New York and South Dakota, it is provided that the court shall not make an application of the property cy pres without the consent of the donor of the property if he be living.

In Minnesota the statute requires the consent of the trustee.

A few States, in the absence of statute, have rejected the doctrine of cy pres.

Comment c. Specific provisions in the terms of the trust.

Where the testator makes an express provision as to the disposition of the property if the particular purpose should fail, that provision is controlling. Roberds v. Markham, 81 F.Supp. 38 (D.C.D.C.1948)(citing Restatement of Trusts, ~ 399); First Nat.

§ 65Termination or Modification by Consent of Beneficiaries, Restatement (Third) of...

Restatement(Third) of Trusts § 65(2003)

Restatement of the Law -Trusts

Database updated March 2oi4 Restatement(Third) of Trusts

Part 5. Modification and Termination of Trusts

Chapter 13. Modification and Termination of Trusts

§ 65 Termination or Modification by Consent of beneficiaries

General Comment: Reporter's Notes on § 65 Case Citations - by Jurisdiction

(1) Except as stated in Subsection (2), if all of the beneficiaries of an irrevocable trust consent, they can compel the termination or modification of the trust.

(2) If termination or modification of the trust under Subsection (1) would be inconsistent with a material purpose of the trust, the beneficiaries cannot compel its termination or modification except with the consent of the settlor or, after the settlor's death, with authorization of the court if it determines that the reasons) for termination or modification outweigh the material purpose.

General Comment: a. Scope, background, and general principles. With the rule of this Section contrast the rule of § 66, which depends upon a finding of unanticipated circumstances but does not require beneficiary consent.

The rule of this Section applies to both testamentary trusts and irrevocable inter vivos trusts. It defines the conditions upon which beneficiaries may join together to modify a trust or to compel its termination, in whole or in part, although the period fixed by the terms of the trust for its duration (§ 61) has not expired.

For purposes of the rule of this Section, separable and independent shares of a single trust are to be treated as separate trusts.

Although Subsection (2) is not a part of the English law, that subsection recognizes the prevalent American view under the so- called Claflin doctrine (Claflin v. Claflin, 149 Mass. 19, 20 N.E. 454 (1889)).

While the rule against perpetuities requires only the timely vesting of interests and does not directly limit the duration of trusts, the Wile of Subsection (2) ceases to apply after the perpetuities period has expired, and the Clatlin doctrine no longer restricts the beneficiaries' power to terminate or modify the trust under Subsection (1). See § 29, Comment h. See also Reporter's Notes.

On settlor as sole beneficiary, see Reporter's Notes (third and fourth paragraphs of introductory notes to this Section).

The consent of the settlor of an irrevocable trust cannot cure a lack of full beneficiary consent under Subsection (1). Nor does the objection of a settlor who is not also a beneficiary prevent termination or modification of the trust if the requirement of Subsecrion (1) is satisfied and there is no "material purpose" obstacle under Subsection (2).(Of course, a settlor's testimony § 65Terrnination or Modification by Cansent of Beneficiaries, Restatement (Third) of...

would be relevant in amaterial-purpose inquiry.) Similarly, unless the trustee is also a beneficiary, tErmination or modification under the rule of this Section does not require the consent of the trustee.

If the beneficiaries can compel termination ar modification of a trust under this Section, it is not necessary that they obtain a court decree directing or authorizing termination or establishing the modification. As a practical matter, however, the trustee is under a duty to assure that all requirements of the rule are satisfied before acting on a beneficiary plan for termination or modification.(On a trustee's right to petition the court for instructions, see § 71.)

If the trustee takes action, reasonably and in good faith, on the basis of the consent of the beneficiaries, but it turns out that the action was contrary to a material purpose of the trust or that consent was not properly obtained from or on behalf of all beneficiaries, the consentingbeneficiaries may not hold the trustee liable for damages resulting from action taken by the trustee before becoming aware of the impropriety. When the trustee's action was not taken reasonably and in good faith, the court, in determining whether estoppel applies or the amount of damages recoverable, may consider the relative fault of the various parties and the nature of the trust purposes or other obstacle to the requested termination or modification. (In this commentary, as elsewhere in this RestaCement, a reference simply to "consent" refers to a consent that was not improperly obtained, including by inadequacy of disclosure where disclosure is required.)

Comment on Subsection (1): b. Requirement that all beneficiaries consent. The rule of Subsection (1) requires that consent be obtained from or on behalf of all potential beneficiaries, including those who lack capacity. This requirement of unanimous consent also includes, for example, beneficiaries who are relatively unlikely ever to receive distributions, those whose interests arise by operation of law (i.e., reversionary, or "resulting trust," interests), and persons who hold powers of appointment under the trust, as well as those who would take in default of the exercise of any but a presently exercisable general power (on which see § 74). See generally § 48, Comment a, defining trust beneficiary. Also included among those whose consent is required are successors in interest of prior beneficiaries, and the potential unborn (including after-adopted) or unascertainable beneficiaries so often provided for by class description, as in a seemingly simple trust designed to pay income to A for life and then to distribute the principal to A's descendants who are living at her death.

Illustrations: Illustrations:

1. S created an irrevocable inter vivos trust for his mother M for life, remainder to his daughter D if she survives M,and if she does not, remainder to S's friend F. Under traditional rules of construction (which would not impliedly require F to survive M), Subsection (1) is satisfied if M,D, and F all agree to a proposed termination or modification. Subsection (1) does not require S's consent (although his consent may be important if there would otherwise be a material-purpose obstacle under Subsection (2)).

2. The wine trust as in Illustration 1, except that its terms also require that F be alive at M's death in order to take. Under common-law rules of construction applicable in this state (i.e., with no substituted gift to the issue of a deceased remainder beneficiary), there is now a reversionary interest in the trust, to take effect if both D and F predecease M. Therefore, Subsection (1) also requires the consent of S (as a reversionary beneficiary not as settlor), unless he has died before the time of the agreement, in which case the reversio~er(s) whose consent would be required would be S's successors) in interest.

In cases more complicated than those in the foregoing lllustrations (and more typical of properly drawn, modern dispositions), the requirements of Subsection(1) are likely to be difficult to satisfy. The consent of potential beneficiaries who cannot consent § 65Termination or Modification by Consent of Beneficiaries, Restatement (Third} of... for themselves, however, may be provided by guardians ad litem, by court appointed or other legally authorized representatives, or through representation by other beneficiaries under the doctrine of virtual representation. See Reporter's Notes.

As a practical matter, however, the necessary consents may not be obtainable in many situations. This is not only because some beneficiaries may dissent from a termination or modification plan but also because of fiduciary inhibitions on the part of those called upon to represent the interests of others. The technical and practical problems of representing others are particularly challenging whenever snore is involved than mutually beneficial modification of administrative provisions.

Illustrations: Tllustrations:

3. The terms of the trust provide for income to be distributed to L for life, remainder at his death to be distributed to his then living descendants. L's only descendants are his daughter, D, and his son, S (both young adults). L would like to receive increased distributions from the trust, and D and S have indicated that they would be happy to support a modification that would authorize the trustee to invade principal for L's benefit, which the present terms of the trust do not allow. The need to obtain consent on behalf of potential unborn remainder beneficiaries (possible issue of D or S who might take should D or S predecease L) presents the question whether a guardian ad litem, or S and D as virtual representatives (acting in an essentially "donative" frame of mind), could properly provide that consent because invasions of principal would impair the value of the remainder interests of absent beneficiaries, who receive nothing in return. (This is not to suggest that the cause is necessarily hopeless. See Reporter's Notes.)

4. The same facts as in Illustration 3, except that the desired trust amendment(again, suggested by L and supported by D and S) is one that would free the trust-investment program of a restriction imposed by the terms of the trust and that could be expected to be beneficial to all and particularly to the remainder beneficiaries. Obtaining consent on behalf of potential unborn remainder beneficiaries, either by guardian ad litem or virtual representation, does not appear difficult.

c. Required consent not oblained. Where consent of all beneficiaries cannot be obtained, the other beneficiaries cannot compel termination or modification under this Section. Even in such a case, however, if the court is satisfied that the best interests of the beneficiaries as a whole would be served by a proposed termination or modification and if continuation of the trust is not required by Subsection (2), a court may order a partial termination of the host(or other arrangement that might involve bonding, insurance, or impounding of some trust property) in a manner that will not prejudice the interests of nonconsenting beneficiaries.

Comment on Subsection (2):

d. The material-purpose restriction. Under the rule of Subsection (2), even all of the beneficiaries acting together ordinarily cannot compel termination of a trust if its continuance is necessary to carry out a material purpose of the trust. Similarly, the beneficiaries ordinarily cannot compel modification of the trust if the modification is inconsistent with a material purpose of the trust.

Because the rights of the beneficiaries are thus limited out of respect for serious objectives that appear to have motivated the settlor in creating the trust, however, the material-purpose restriction does not apply if the settlor is alive, legally competent, and content to waive it Also, the restriction becomes unimportant and does not apply if the material purpose is no longer relevant or cannot be accomplished in any event. Furthermore, following the death or incapacity of the settlor, an appropriate court may authorize the termination of a trust under this Section if it determines that the reasons) offered in support of the beneficiaries' petition for termination outweigh, at the time, the concerns or objectives reflected in the material purpose. § 65Termination or Modification by Consent of Beneficiaries, Restatement (Third) af...

The line is not always easy to draw between a "material purpose" on the one hand and, on the other, specific intentions that are deemed less important so that the Claflin doctrine does not protect them. Occasionally, a settlor expressly states in the will, trust agreement, or declaration of trust that a specific purpose is the primary purpose or a material purpose of the trust. Otherwise, the identification and weighing of purposes under this Section frequently involve a relatively subjective process of interpretation and applicationof judgment to a particular situation, much as purposes or underlying objectives of settlors in other respects are often left to be inferred from specific terms of a trust, the nature of the various interests created, and the circumstances surrounding the creation of the trust. The question is narrower and more focused, although not necessarily easier, when applied to a specific modification rather than to the termination of the trust (see Comment ~.

Material purposes are not readily to be inferred. A finding of such a purpose generally requires some showing of a particular concern or objective on the part of the settlor, such as concern with regard to a beneficiary's management skills, judgment, or level of maturity. Thus, a court may look for some circumstantial or other evidence indicating that the trust arrangement represented to the settlar more than a method of allocating the benefits of property among multiple intended beneficiaries, ar a means of offering to the beneficiaries (but not imposing on them) a particular advantage. Sometimes, of course, the very nature or design of a trust suggests its protective nature or some other material purpose.

Illustrations: Illustrations:

5. S devised a portion of her estate to T in trust to pay to her grandson B (then age 14) such amounts as T may deem appropriate for B's support and education, and after B attains age 21 to pay him all of the trust income, plus additional amounts of principal in T's discretion, and then to distribute one-third of the trust estate to B at age 25 and to terminate the trust and distribute the remaining property to B when he reaches age 30. B has now reached age 22, has completed his college education, and wishes to use the funds held in the trust to purchase a home and establish his own business. (Under the terms of the trust, B is the sole beneficiary, with no other provision for the disposition of the property even in the event of his death before age 30.) The nature and evident protective purpose of the trust are such that B cannot compel its termination earlier than provided by its terms.

6. S devised a portion of his estate to T as trustee, "to apply such amounts of the trust income and principal as T deems appropriate for the education of my grandchildren, X, Y, and Z," and when "the youngest of themreaches age 26, or at such earlier time as T, in her sole discretion, believes they have all completed their education," the trust is to terminate, with the trust estate then to be distributed to those grandchildren in equal shares.(Under traditional rules of construction applicable to this trust, the remainder interests of the three grandchildren, except as they may be diminished by distributions for education, are indefeasibly vested.) When the grandchildren are ages 19, 21, and 23, they all agree to have the trust terminated and request T to distribute the trust property to them. T declines to do so. The trust terms reveal, presumptively at least, a material purpose that prevents the beneficiaries from compelling termination.

The mere fact that the settlor has created a trust for successive beneficiaries does not prevent the beneficiaries from terminating or modifying the trust to reallocate the beneficial interests among themselves if they wish to do so. A trust plan to provide successive enjoyment is not itself sufficient to indicate, for example, that the settlor had a material purpose of depriving the beneficiaries of the property management or otherwise of protecting them from the risks of their own judgment. In the absence of additional circumstances indicating a further purpose, the inference is that the trust was intended merely to allow one or more persons to enjoy the benefits of the property during the period of the trust and to allow the other beneficiary or beneficiaries to receive the property thereafter.

Thus, if the beneficiaries of such a trust are under no incapacity and they all consent to the termination of the trust, they can compel distribution of the trust property as they agree. Similarly, if a beneficiary who is entitled to the income acquires the interest of the sole remainder beneficiary, ar vice versa, there is no protective or other purpose implicit in a plan of § 65Termination or Modification by Consent of Beneficiaries, Restatement (Third) of... successive enjoyment that would indicate that the person who thus becomes the sole beneficiary should not be allowed to compel termination of the trust.

Illustrations: Illustrations:

7. S leaves property to T in trust to pay the income to L for life, remainder on L's death to R. Absent some evidence of a purpose other than to enable L and R to enjoy the property in succession, under a typical rule of constriction (not impliedly requiring R to survive L) L and R can compel termination of the trust in favor of either or both of them, or in favor of one or more others, as L and R may agree.

8. H leaves property to T in trust to pay the income to W for life and on W's death to pay the principal to such of the children of H's deceased brother D as are then living, and if none is then living then to X. Under traditional construction, W,X, and D's children are the only beneficiaries of the trust. If they all consent, in the absence of other evidence of trust purpose, they can terminate the trust and have the property distributed as they agree.

9. S left her residuary estate in trust to T to pay the income to L for life, and on L's death to distribute the remainder to R if then living and otherwise to R's issue. R subsequently dies leaving no issue, and the trust interest, which thereby fails, passes by resulting trust to L as S's sole intestate successor. L has thus become the trust's sole beneficiary and can compel T to convey the trust property to her in the absence of a showing that S had a purpose in creating the trust other than to provide for R or his issue following the provision for L.

10. The same facts as in Illustration 9, except that it is shown that a primary purpose for S's creation of the trust was ber concern over what she perceived as L's unsound financial judgment and inability to manage the property. L, though she has become sole beneficiary, cannot compel termination of the trust.

e. Discretionary and spendthrift trusts. If the interests of one or more of the beneficiaries of a trust are subject to restraints on alienation (see §§ 58, 59), or if the terms of the trust provide support or other discretionary benefits for some or all of the beneficiaries (see § 50), this may supply some indication that the settlor had a material purpose a protective purpose— that would be inconsistent with allowing the beneficiaries to terminate the trust. Nevertheless, spendthrift restrictions are not sufficient in and of themselves to establish, or to create a presumption of, a material purpose that would prevent termination by consent of all of the beneficiaries. This is also true, in many contexts, of discretionary provisions.

A spendthrift clause maybe included as a routine or incidental provision of a trust (unimportant or even unknown to the settlor) as a part of a trust established for tax purposes, merely to provide successive enjoyment, or for other reasons not inconsistent with allowing premature termination upon application of all of the beneficiaries. Thus, for example, the fact that a lawyer had explained the effect and advised the inclusion of a spendthrift provision is not alone sufficient to establish that it represents more than an advantage that the beneficiaries are free to relinquish by consenting to termination of the trust.

Similarly, discretionary provisions, like other provisions involving successive enjoyment, may represent nothing more than a settlor's plan for allocating the benefits of his or her property flexibly among various beneficiaries rather than revealing some significant concerns or protective purposes that would prevent the beneficiaries from joining together to terminate a trust and divide or distribute the property as they wish under the rule of this Section. This is particularly so when the trust is created to provide, as needed, for the life beneficiary's support and care, with remainder to others. Many trusts, however, have broader discretionary purposes and beneficiary classes. The nature of the interests and terms of trusts of this latter type may, without more,justify a finding that it was a significant or "material" purpose of the settlor to secure the ongoing, flexible (and possibly expert) judgment of the trustee regarding the amount, timing, and recipients of distributions over the duration of the trust, as circumstances and opportunities might develop (cf. Comment ~. § 65Termination ar Madification by Consent of Beneficiaries, Restatement (Third} of...

Illustration: Illustration:

11. Upon W's death, her revocable trust was divided by T (W's successor trustee) by prescribed formula into two trusts. Trust A provided for all of its income,"plus additional amounts of principal in T's discretion," to be paid to W's husband, H. Trust B authorized T to pay "such amounts of income or principal or both to any one or more of H, my issue, and the spouses of my issue as T may deem appropriate, taking into account any personal, financial, tax, and other considerations T deems appropriate." On H's death, both trusts are to terminate and be distributed to W's then living issue. The terms of Trust B indicate a material discretionary purpose sufficient to prevent its termination by the beneficiaries. The above-described terms of Trust A, however, reveal no material purpose that would bar termination under the rule of this Section. f Material purpose and modification. Although a trust may have a material purpose that would preclude complete or even partial termination of the trust, a particular modification agreed to by the beneficiaries might not be inconsistent with any material purpose of the trust. In such a case, all of the beneficiaries could join together to modify the terms of the trust to that extent. Thus, where modification is involved, under Subsection (2) of this Section the material-purpose inquiry focuses on the particular amendment sought by the beneficiaries.

For example, a proposed modification might change the trustee ar create a simple, inexpensive procedure for appointing successar trustees, or it might create or change procedures for removing and replacing trustees. Modifications of these types may well improve the administration of a trust and be more efficient and more satisfactory to the beneficiaries without interfering with a material purpose of the trust. On the other hand, repeated modifications to change trustees or even a particular change of trustee, ar an amendment of provisions relating to the trusteeship, might have the effect of materially undermining the contemplated qualities or independence of trustees. A given change might even have the effect of shifting effective control of the trust in such a way as to be inconsistent with a protective management purpose or other material purpose of the trust. Thus, changes of trustees or in trustee provisions are to be particularly but sympathetically scrutinized for possible conflict with a material trust purpose. g. Material purpose and charitable trusts. Where a specific charitable purpose is designated in the terms of a trust, that designation reflects a material purpose of the settlor under the rule of this Section, so that the specific charitable purpose cannot be changed or exchanged for a trust or other benefits serving a different charitable purpose. (Compare, however, § 67 on the cy pres doctrine.) h. Compromise of contest The fact that the beneficiaries could not terminate a trust because to do so would be inconsistent with a material purpose of the settlor does not preclude the court from approving a compromise under which a part of the trust would be terminated in order to settle a bonafide contest of the will that would create the trust or to settle bonafide litigation challenging the validity of an inter vivos trust

Reporter's Notes on § 65

This Section covers, more succinctly but in some respects in more detail and with some doctrinal departures, the subject matter treated in Restatement Second, Trusts § 337 ("Consent of Beneficiaries"), § 338 ("Consent of Beneficiaries and Settlor"), § 339("Where Settlor is Sole Beneficiary"), and ~ 340("Where Some of the Beneficiaries Do Not Consent').

See generally on termination and modification by beneficiary consent, IV William F. Fratcher, Scott on Trusts §§ 337-340.2 (4th ed. 1989); and George G. Bogert &George T. Bogert, The Law of Trusts and Trustees §§ 1005-1008 (Rev. 2d ed. 1983). § 65Termination or Modificatian by Consent of Beneficiaries, ResEatement {Third) of...

Settlor as sole beneficiary. Clearly implicit in the rule of this § 65, and not reiterated in the commentary, is the rule stated in Restatement Second, Trusts § 339: "Tf the settlor is the sole beneficiary of a trust and is not under an incapacity, he can compel the termination of the trust, although the purposes of the trust have not been accomplished." That the so-called "doctrine of worthier title" has no application in determining whether a settlor is sole beneficiary, see § 49, Comment a(1)(remainder to settlor's "heirs" not a reversion in settlor). See also Lanoue v. Comm'r, of Soc. Sec. Adin., 146 N.H. 504, 774 A.2d 1236(2001) (rejecting earlier contrary inference—i.e., of a reversion under the worthier title doctrine that had been recognized previously in Restatement Second, Trusts § 127, Comment b).

That a settlor-beneficiary who retained a right to the trust income, to principal in the trustee's discretion, and a general testamentarypower of appointment, with remainder in default of appoinhnent to others, is not the sole beneficiary and therefore cannot terminate the trust without the consent of the other beneficiaries, see Fewell v. Republic National Bank, 513 S.W.2d 596 (Tex.Civ.App.1974), noting that even the settlor-beneficiary's creditors could reach only the retained interests and not the trust property. The court (at 599, quoting from Scot[ on Trusts) observed "how much stronger are the reasons for [that principle's] application where no creditors are concerned but [we have] only the settlor of the trust claiming the right to change his mind to the hurt of beneficiaries whose rights were established by a solemn instrument executed by him." The court went on to observe, on trust purposes and impossibility, that "the trial court conclusively established that the trust had purposes other than the protection of the settlor-beneficiary's interest through the spendthrift provisions. The `whole purpose' of the trust would not become impossible of accomplishment merely because the spendthrift provisions as to the interest of the settlor-beneficiary were invalid. It is obvious from the elabarate trust instrument that a significant purpose of the trust was to provide for the support and education of Mrs. Fewell's children under certain conditions. That purpose is neither impossible of accomplishment nor illegal."

Modification and material purpose. If there is no "material purpose" barrier to termination by the beneficiaries, certainly the beneficiaries can also modify the trust (and § 337 of the prior Restatement appears only to go this far). This § 65 makes clear, however, that, even if termination would violate a material purpose of the trust, the beneficiaries may compel a particular amendmentthat is not inconsistent with that(or some other) material purpose. See similar rule in Uniform Trust Code § 410(b).

Other departures, or possible deparh►res, from the Second Restatement are indicated subsequently in the Reporter's Notes to particular Comments.

Comment a:

"The American cases recognize primarily the privilege of the donor to qualify his gift as he pleases within legal limits.... The English courts concentrate their predominate attention upon the situation of the beneficiary who being substantially the owner of the trust estate should be permitted in their judgment to deal with it as he wishes....

"This retrospective exposition of the subject [of termination by beneficiaries] may well be concluded in the words of Chief Justice Vanderbilt ...: "The English authorities are of no force here because of our fundamentally divergent view of the power of the settlor and the beneficiaries of a trust over the trust Res. In England the beneficiaries of the trust may by united action terminate, not withstanding the fact that to do so may nullify the intention of the settlor.... In this State it is the intention of the settlor of the trust that governs and not the desires of the beneficiaries."

Speth v. Speth, 8 N.J.Super. 587, 592, 598, 74 A.2d 344, 347, 350 (1950), quoting from Mesce v. Gradone, 1 N.J. 159, 165, 62 A.2d 394, 396 (1948).

Further on the settlor's "material purpose" as an obstacle to termination or modification by the beneficiaries (the Claflln doctrine), see Reporter's Note to Comment d § 65Termination or Modification by Consent of Beneficiaries, Restatement (Third} of...

That the rule of this Section applies to partial termination, see Scott on Trusts, supra, § 337.8, which begins: "Where the continuance of the trust of the whole of the trust property is not necessary to carry out a material purpose of the host, and all of the beneficiaries consent ..., they can compel the termination of the trust as to a part of the property."

Indestructibility and the rule against perpetuities. In addition to the discussion in § 29, Comment h, the principle that tnists that continue beyond the perpetuities period are no longer indestructible(and that spendthrift restraints also are no longer applicable) is discussed in Restatement Second, Property (Donative Transfers). Id. § 2.1 states that a trust that "has not terminated within the period of the rule against perpetuities ... shall continue until the trust terminates in accordance with its terms, except that a trust, other than a charitable trust, maybe terminated at any time after the period of the rule against perpetuities expires by a written agreement of all of the beneficiaries...." Td., § 2.1, Comment a, states that this principle limits the "period of time that the creator of a trust is allowed to force the effectuation of the material purpose of the trust, when the continued accomplishment of such purpose is against the wishes and desires of the current beneficial owners of the trust property. Some limit is desirable in order to prevent the possible undesirable social consequences of the views of persons long removed from the current scene influencing unduly the wishes and desires of those living in the present." Id., § 2.1, Comment b, notes that in determining "when an otherwise indestructible trust becomes destructible by all the beneficiaries ..., the measuring lives are selected in the same manner as if they were being selected in regard to the time allowed for the vesting of all non-vested interests...." Id., § 2.1, Comment g, provides: "... There may be beneficiaries of the trust at that time who do not have the legal capacity [to consent], such as minors or incompetents. As to them, a guardian or other appropriate representative must be authorized to sign the agreement."

On the last paragraph of this Comment, concerning the trustee's liability or lack thereof, compare Restatement Second, Trusts § 342.

Comments b and c:

With the discussion in Comment b of representation by others as a means of obtaining consent on behalf of those who cannot consent for themselves, contrast the traditional view of Restatement Second, Trusts § 337(1), requiring that "all of the beneficiaries of a trust consent and none o£them is under an incapacity'(emphasis added); and see Scott on Trusts, supra, § 337, beginning: "Although the time designated by the terms of the tn~st for its termination has not arrived, the beneficiaries, if they all consent and are suijuris, can compel its termination if its continuance is not necessary to carry out a material purpose for which it was created."(Emphasis added.)

Comment b, however (text following Illustrations 1 and 2), reflects the growing recognition in cases and statutes that traditional means of representing and binding absentees in litigation (e.g., the use of guardians ad Litem and virtual representation) should be available for the admittedly different function of obtaining consent for purposes of a transfer, exchange, or modification of property rights under trusts. See the leading, and once possibly unique, cases of Hatch v. Riggs National Bank, 361 F.2d 559 (D.C.Cir.1966)(on guardians ad litem), and Estate of Lange, 75 N.J. 464, 383 A.2d 1130 (1978)(on the doctrine of virtual representation); and see Uniform Trust Code Article 3, especially § 304(on virtual representation) and § 305 (oncourt-appointed representatives e.g., guardians ad litem), plus the Comment to UTC § 410. See also Wis. Stat. Ann. § 701.12 and Calif. Probate C. § 15405, both of which allow, for purposes of modification and termination of trusts, the consent of a beneficiary who lacks legal capacity or who was unascertained or unborn to be given by a guardian ad litem, who in giving consent may rely on (in the words of both statutes) "general family benefit accruing to living members of the beneficiary's family."

The traditional view. In a case involving a trust for the settlor's widow for life, with remainder, in effect, to the settlor's then- living descendants, per stirpes, the traditional view and its implications are stated succinctly in the per curiam opinion in In re Lewis' Estate, 231 Pa. 60, 79 A. 921 (1911), the whole of which reads as follows: "The widow of the testator, for whose benefit he created the trust which she and their sole surviving child wish to have terminated, is still alive. Who will be the ultimate distributees of the fund under the will of her husband cannot be determined until her death, and the court below could not have

§ 66Power of Court to Modify: Unanticipated Circumstances, Restatement (Third) of...

Restatement (Third) of Trusts § 66(2003)

Restatement of the Law -Trusts

Database updated March 2oi4 Restatement (Third) of Trusts

Part 5. Modification and Termination of Trusts

Chapter 13. Modification and Termination of Trusts

§ 66 Power of Court to Modify: Unanticipated Circtmistances

Comment on Subsection (1): Reporter's Notes on § 66 Case Citations - by Jurisdiction

(1) The court may modify an administrative or distributive provision of a trust, or direct or permit the trustee to deviate from an administrative or distributive provision, if because of circumstances not anticipated by the settlor the modification or deviation will further the purposes of the trust.

(2)If a trustee knows or should know of circumstances that justify judicial action under Subsection (1) with respect to an administrative provision, and of the potential of those circumstances to cause substantial harm to the trust or its beneficiaries, the trustee has a duty to petition the court for appropriate modification of or deviation from the terms of the trust.

Comment on Subsection (1):

a. Scope and purpose of Section. Witb the rule of this Section, contrast the rule of § 65, which requires the consent of all beneficiaries but does not depend on a finding of unanticipated circumstances.

This Section—the so-called "equitable deviation" doctrine—applies to both charitable and private trusts. Although the unanticipated circumstances in cases falling under this Section are likely to be circumstances that have changed since the creation of the trust, the rule of the Section does not require changed circumstances. It is sufficient that the settlor was unaware of the circumstances in establishing the terms of the trust.

It is not necessary under this Section that the situation be so serious as to constitute an "emergency" or to jeopardize the accomplishment of the tnist purposes.

The objective of the rule allowing judicial modification (or deviation) and the intended consequences of its application are not to disregard the intention of a settlor. The objective is to give effect to what the settlor's intent probably would have been had the circumstances in question been anticipated.

b. Operation of Section. The terms of the trust that the court may modify, or from which the court may authorize deviation by the trustee, may be provisions governing the management or administration of the trust estate or they may be provisions defining the beneficial interests or entitlements of the various trust beneficiaries. Thus, for example, the provision subject to modification or deviation maybe one expressly directing or expressly forbidding the sale of certain properties or the acquisition § 66Power of Court to Modify: Unanticipated Circumstances, Restatement (Third) of,.. of certain types of investments. Or the modification or deviation may,for example, involve trust terms that do not allow invasion of principal or accumulation of income.

If appropriate to the circumstances prompting the court action, and to the purposes and other circumstances of the trust, the court may so modify the terms of the trust as to require prompt termination. If this result appears premature to the court, it may authorize the trustee subsequently to terminate the trust if the trustee concludes from further experience (or despite lesser modification) that the purposes of the trust would be better served by termination. In the event of termination under the rule of this Section, the trust property is to be distributed in accordance with the trust purposes and the settlor's probable intention.

Upon a showing of changed circumstances, or a petitioner's credible presentation that relevant circumstances were unknown to the settlor, the burden of persuasion shifts to the persons) seeking to show that the circumstances were anticipated by the settlor during the formulation and execution of the trust. Failure to provide in the terms of trust for subsequent developments involved in a case reinforces an inference that the circumstances were not anticipated by the settlor.

Then, upon a finding of unanticipated circumstances, the court must further determine whether a proposed or contemplated modification or deviation would tend to advance (or, instead, possibly detract from) the mist purposes. This latter inquiry is likely to involve a somewhat subjective process of attempting to infer the relevant purpose or purposes of a trust from the general tenor of its provisions and from the nature of the beneficial interests, together with the family or personal relationships involved in the trust. In this process, it is appropriate that courts act with particular caution in considering a modification or deviation that can be expected to diminish the interests) of one or more of the beneficiaries in favor of one or more others.

Illustrations: Illustrations:

1. The terms of the trust being administered by T require the retention of a modest-shed apartment complex that the settlor had owned and operated during her lifetime. It has subsequently become clear that this apartment complex cannot be administered efficiently and can be expected to continue to detract from the overall performance of the trust estate, to the disadvantage of all of the beneficiaries. The court may authorize deviation from the terms of the trust, enabling the trustee to sell the apartment complex and reinvest the proceeds.

2. S left his estate to T as trustee with a direction to pay the trust income to L for life and, upon her death, to terminate the trust and distribute the remainder to R if then living and if not then to R's issue. Some years after S's death, L encountered a series of health problems that will result in major medical expenses and require expensive care over the rest of her lifetime. It appears from the circumstances and other evidence bearing on the planning of S's estate that L was the primary object of his bounty but that, given the size of the trust estate, S anticipated that L could live comfortably on its income or even a part thereof. Although the terms of the trust do not authorize T to invade principal, the court may modify the trust provisions to enable T to do so as necessary to meet L's additional needs.

3. H and W executed revocable trusts at the same time pursuant to a common (although not contractual) plan under which the trust of the first of them to die would continue for the other; under that common plan, both trust remainders would eventually pass to the issue of H and W. Accordingly, upon W's death a number of years ago, T became ber successor trustee, with instructions to pay H all of the income plus such amounts of trust principal as T deems necessary to enable H to maintain his accustomed standard of living; upon H's death, the trust remainder is to pass (as are H's own probate and trust assets) by right of representation to the issue of H and W. Subsequent to W's death, H has become legally incapacitated and is unable to enjoy or manage the substantial amount of unneeded income that is being distributed to him; he is, however, expected to survive for a considerable period of time. The income from W's trust and from H's personal estate, together with his substantial pension, are more than sufficient to provide for H's foreseeable needs and comfort over the rest of his lifetime. There is no evidence that W anticipated the present situation, and there are no estate-planning objectives (such as the federal estate tax marital deduction) that would § 66Power of Court 4o Mndify: Unanticipated Circumstances, Restatement (Third} of...

require continued payment of the trust income to H. The court may direct T to cease paying the trust income to H and to accumulate it for eventual distribution to the remainder beneficiaries, unless and until H's circumstances again change. The result of such a modification will be to avoid conservatorship expenses and will be consistent with and advantageous to W's (and also H's) underlying plan eventually to benefit the same remainder beneficiaries.

4. S established a trust for her grandson, G, under which the trustee, T, is directed to pay all of the income to G for life and thereafter to distribute the principal outright to diverse remainder beneficiaries, consisting of G's descendants and various of S's collateral relatives or their issue. Over the many years of the trust's operation, T has pursued a growth-oriented investment program suitable to the trust's objectives and circumstances (risk tolerance, etc.) and thoroughly approved of by the beneficiaries, except that in recent years the declining and now very low yield from the substantial stock portion of the portfolio has led G to complain about the trust portfolio's overall low level of income productivity. T is sympathetic but would not like to see the investment program altered if another way can be found to restore something approximaring the level of benefits to which G had earlier been accustomed. If the court concludes that it would be fair to all beneficiaries and would better serve their interests for T's investment judgment not to be inhibited and for T to be authorized to provide an appropriate level of distributions to G, the court may modify the terms of the trust to authorize invasion of principal accordingly.(C£ § 79, on the trustee's duties with respect to impartiality and productivity of income.)

5. S, who outlived her husband and her only child, left her estate in three shares, one for each of her three grandchildren. Each share was to be held in trust for the grandchild's support and education, with the property to be distributed to the grandchild "if and when he or she attains age 25." Two of the grandchildren had reached age 25 by the time of S's death and thus took their shares outright; the other grandchild, G, was 16 when S died and has now died at age 23, leaving a widow, two very young children, and no will. Under the applicable rule of construction, G's interest fails as a result of bis failure to survive until the time of distribution.(The Local anti-lapse statute does not apply because G did not predecease S.) Thus, unless modified, S's will has made an incomplete disposition of this share of her estate, and therefore this trust share will pass by resulting trust (see §§ 7 and 8) to S's heirs at law that is, in the event of S's partial intestacy, this reversionary interest would belong equally (one-third each) to the three grandchildren. This would result ultimately in a one-ninth share of S's estate being available to G's family while the other grandchildren end up with, essentially, four-ninths of S's estate apiece (one-third via their respective trusts and one-ninth by resulting trust). These consequences of a failure of the remainder of G's trust share would produce a striking distortion of an overall testamentary trust plan that, on its face, appears to contemplate equal treatment of S's three lines of descent. Because of the unanticipated circumstances in this case and S's failure to make provision for them, the rule of this Section allows the court to modify the terms of the trust if it concludes that S's probable intention and the trust purpose would be better served by doing so.

6. The same facts as in Illustration 5, except that the trust language and applicable rule of construction do not subject G's interest to an expressed or implied requirement of survival. The remainder would therefore become an asset of G's estate, passing by intestate succession partly to his widow and partly to his children. If the court concludes that the unanticipated circumstances of G's early death would thus result in a distribution to G's children contrary to the purposes implicit in the trust (i.e., a purpose of providing a trust management and distribution plan, rather than relying on guardianship law, or even a custodianship, either of which would result in early distribution to young adults (e.g., age 18) who in S's view are likely to lack financial judgment and experience), the court may modify the trust terms to direct that the shares of the minor great grandchildren be held in trust for them until they attain age 25, or maybe 21 or so, as may appear reasonably consistent with the amounts and costs involved as well as with S's general attitude concerning financial mah►rity.

c. Illegality or impossibility. If it is or becomes unlawful or impossible to accomplish the purposes of a private trust, and the terms of the trust make no provision for the situation, this constitutes an unanticipated circumstance for purposes of this Section. Thus, the court may terminate the host and direct distribution of the property in accordance with the settlor's probable intention.

~ a ~ § 66Power of Court to Modify, Unanticipated Circumstances, Restatement (Third) of.,.

(On charitable trusts, however, see § 67.) If it becomes unlawful or impossible to comply with certain terms of the trust, the court may modify those terms or authorize deviation from them in order to further the intended purposes of the trust. d. Inefficiency ofsmall trust. If the trust estate is or becomes so small that the interest of the beneficiaries, or the trust purposes, would be better served by terminating the trust, the court may so order and shall then direct distribution in a manner consistent with the probable intention of the settlor.

Comment on Subsection (2):

e. Duty and authority of trustee. If circumstances exist that would justify judicial action with respect to an administrative provision under Subsection (1) of this Section, and if the trustee knows or should know of those circumstances and that substantial harm may result to the trust or its beneficiaries from adhering to the existing terms of the trust, the trustee is under a duty to initiate proceedings to seek appropriate modification of or deviation from that administrative provision.

This duty under Subsection (2) ordinarily does not apply to the initiation of proceedings for modification of or deviation from distributive provisions of a trust. The trustee may, however, upon or without request by a beneficiary, seek modification or deviation where judicial action may be justified under Subsection (1) with respect to distribution provisions. Furthermore, if the trustee is actually aware that a purpose of the settlor would be jeopardized by adhering to existing provisions governing distribution when judicial action under Subsection (1) would be justified, the trustee has a duty to petition the court for instructions or for appropriate deviation or modification. See Reporter's Notes.

Illustration: Illustration:

7. The trust and circumstances are as stated in Illustration 1. The trustee has a duty to petition the court for authority to disregard the settlor's direction to retain the apartment complex.

In a situation involving an emergency,that is, a situation of unanticipated circumstances in which the trustee believes substantial harm will result to the trust or its beneficiaries if action is not taken promptly, the trustee may deviate from the terms of the trust without prior authorization of court. If the court should subsequently determine that deviation was not justified under the principles of this Section, the trustee will not be liable in the absence of bad faith or unreasonable disregard of the terms of the trust.

Reporter's Notes on § 66

Restatement Second, Trusts § 167(1) ("Change of Circumstances"), was considerably more restrictive, stating: "The court will direct or permit the trustee to deviate from a term of the trust if owing to circumstances not known to the settlor and not anticipated by him compliance [with the terms of the trust] would defeat or substantially impair the accomplishment of the purposes of the trust; and in such case, if necessary to carry out the purposes of the trust, the court may direct or permit the trustee to do acts which are not authorized or are forbidden by the terms of the trust."

See also, for similar statements of traditional doctrine, IIA William F. Fratcher, Scott on Trusts §§ 167-167.2 (4th ed. ]987); and cf. George G. Bogert &George T. Bogert, The Law ot'Trusts and Trustees § 994 (rev. 2d ed. 1983).

The relevant(quite flexible) statute in England is the Variation of Trusts Act of 1958. See also the recent Report on the Variation of Trusts, The Law Reform Commission of Ireland (LRC 63-2000). § 66Power of Court to Modify: Unanticipated Circurrrstances, Restatement (Third} of...

Comment a:

The commentary to Restatement Second, Trusts § 167 (supra), and its Illustrations, as well as the distinct weight of what case authority there is (infra), indicate that the rule of "equitable deviation" applies only to administrative provisions. Compare, however, Restatement Second, Trusts § 168 (especially Comments a-c), allowing acceleration of a beneficiary's rights—e.g., an indefeasibly vested remainder—where "the interest of no other beneficiary of the trust is impaired thereby," and particularly id. § 168, Illustration 5.

Also note Restatement Second, Tnists § 167, Comment b, stating that a court "will not ... direct the trustee to deviate from the terms of the trust merely because [the] deviation wouldbe more advantageous to the beneficiaries" than compliance with the trust terms—the necessity must be to avoid "defeat[ing] or substantially impairing] the accomplishment of the purposes of the trust." Id. § 167(1).

Uniform Trust Code § 411(a) provides a liberalized version of the doctrine of equitable deviation along lines similar to that of this § 66.

That Code also provides (~ 411(b)) that the court "may modify the administrative terms of a trust if continuation of the trust on its existing terms would be impracticable or wasteful or impair the trust's administration." Note that this provision (unlike § 4ll(a)) is limited to administrative terms and seemingly requires a relatively extreme case, but is not dependent on unanticipated circumstances. Although this § 66 does not state such a rule, compare § 27(2), which provides that"a private host, its terms, and its administration must be for the benefit of its beneficiaries," a principle that is briefly elaborated upon in ~ 27, Comment b, and the Reporter's Note thereto, and in § 29(c)(on provisions contrary to public policy), and § 29, Comment m, and its Reporter's Note, dealing with "capricious purposes" and "sound administration of[the] trust."

Compare Connecticut Gen. Stat. § 45a-242 (as amended 2001), which allows the court to remove a trustee if"there has been a substantial change of circumstances" and the court finds that "removal best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose" of the trust and also that "a suitable cofiduciary or successor fiduciary is available."

Unlike many other discussions of this general topic, George T. Bogert, Trusts ~ 146 (Hornbook, 6th ed. 1987) states the rule of equitable deviation in terms of modification being "necessary or highly convenient to assure accomplishment of the settlor's fundamental purposes" due to changed or unanticipated circumstances or "due to the unwisdom of the settlor's directions," the latter later being referred to as "unwise and imprudent directions ... which he thought would be helpful but when put into practice proved an obstacle to the trustee in his efforts to secure for the beneficiaries the benefits which the settlor desired them to have."(Emphasis added.)

Richard A. Posner, Economic Analysis of Law 556 (5th ed. 1998), states that the supposed "dilemma of whether to enforce the testator's intent or to modify the terms of the will in accordance with changed conditions since his death is often a false one. A policy of rigid adherence to the letter of the donative instrument is likely to frustrate both the donor's purposes and the efficient use of resources."

See also Scott on Trusts, supra, § l67 observing that a court, in granting equitable deviation "is permitting the tnzstee to do not what the settlar intended to permit ... but what it thinks the settlor would have permitted if he bad known of or anticipated the circumstances that have happened. Even though the settlor has expressly forbidden what the court permits to be done, the theory is that he would not have forbidden it, but on the contrary would have authorized it if he had known of or anticipated the circumstances. In so doing the court is not interpreting the terms of the trust but is permitting a deviation from them in order to carry ouY the purpose of the trust. If it appears that the settlor did, however, anticipate the circumstances and eLearly provided that the trustee should nevertheless have no power to act in such a way as to prevent the failure of the trust, it would seem that the court would not be justified in permitting the trustee so to act, unless the provision is against public policy. Such

§ 67Failure of Designated Charitable Purpose: The..., Restatement (Third) of,..

Restatement (Third) of Trusts § 6~(2003)

Restatement of the Law -Trusts

Database updated March 2oi4 Restatement(Third) of Trusts

Part 5. Modification and Termination of Trusts

Chapter 13. Modification and Termination of Trusts

§ 6~ Failure of Designated Charitable Purpose: The Doctrine of Cy Pres

Comment: Reporter's Notes on § 67 Case Citations - by Jurisdiction

Unless the terms of the trust provide otherwise, where property is placed in trust to be applied to a designated charitable purpose and it is or becomes unlawful, impossible, or impracticable to carry out that purpose, or to the extent it is or becomes wasteful to apply all of the property to the designated purpose, the charitable trust will not fail but the court will direct application of the property or appropriate portion thereof to a charitable purpose that reasonably approximates the designated purpose.

Comment:

a. The cy pres doctrine: background and scope of the rule. The rule stated in this Section is called the doctrine of cy pres. The expression indicates the principle that, when the exact intention of the settlor is not to be carried out, the intention will be given effect "as nearly" as may be.

At common law in England, a prerogative power of cy pres, exercisable by the Crown in certain circumstances and without regard to the settlor's intent, developed in addition to the judicial power in the Chancellor. The prerogative power (or Legislative counterpart) has not been recognized in the United States, although legislation may reasonably regulate the extent and exercise of the cy pres power of courts. The judicial power of cy pres has evolved in this country along lines generally similar to the equity power under English common law. See Reporter's Notes.

The cy pres doctrine's modern rationale rests primarily in the perpetual duration allowed charitable trusts and in the resulting risk that designated charitable purposes may become obsolete as the needs and circumstances of society evolve over time, not to mention the sometimes unanticipated extent of decrease ar increase in the funds available from a given trust. Nevertheless, the doctrine may also apply to a charitable trust if, at the time of its creation, the particular purpose of the trust has been fully accomplished ar cannot possibly or practicably be accomplished. On the other hand, if at the time of the trust's creation its intended purpose is of no value at all to the community, or is otherwise not charitable by its nature, the trust is not enforceable as a charitable trust and is not subject to the rule of this Section.

The cy pres doctrine is not applicable to private trusts. There are, however, narrower but analogous principles that apply to both private and charitable trusts, as particularly illustrated by the ntle of equitable deviation in § 66 allowing courts, in certain circumstances, to modify the means of accomplishing a trust purpose. Also compare § 29, Comment g, and also Comment i(on consequences of invalidity), and §§ 45- 47 (adaptation of certain intended trusts). (Occasionally, the term "cy pres" is casually § 67Failure of Designated Charitable Purpose: The..., Restatement (Third] of...

used to refer to reformations or judicial modifications in other contexts in which some modified effect is given to dispositions that would otherwise exceed what the law allows, such as under the rule against perpetuities.)

On analogous, widespread statutory rules applicable to certain "institutional funds," see Reporter's Notes.

b. Contraryi~tention ofsettlor. Just as it is against the policy of the trust law to permit wasteful or seriously inefficient use of resources dedicated to charity, trust law also favors an interpretation that would sustain a charitable trust and avoid the return of the trust property to the settlor or successors in interest. See § 28, Comment a. Accordingly, when the particular purpose of a charitable trust fails, in whole or in part, the rule of this Section makes the cy pres power applicable (thus presuming the existence of what is often called a general charitable purpose) unless the terms of the trust (defined in ~ 4) express a contrary intention. (See Reporter's Notes for rationale and for references and observations about experience with the traditional search for general charitable intent.)

A trust provision expressing the settlor's own choice of an alternative charitable purpose will be carried out, without need to apply the cy pres doctrine, assuming not only that the initially specified purpose cannot be given effect or continued but also that the alternative purpose is one that properly can be given effect.

Effect will also be given to terms of a trust providing that, under circumstances described in this Section, the charitable trust is to terminate and that the property ar surplus portion thereof is to be held upon resulting trust (see § 8, Commentg, and Illustration 17), or that the trust property or surplus is to pass pursuant to a noncharitable disposition that can be given effect under applicable rules regulating perpetuities (see § 29(b)). If the substitute disposition is of this latter, nonreversionary type and cannot be given effect, the further presumption then is that the cy pres power is to be exercised because of the failure of its alternative.

The mere fact that the terms of the trust provide that property shall be devoted "forever" to a particular charitable purpose, ar that it shall be devoted "only" to that purpose, or that the property is given "upon condition" that it be applied to that purpose, does not necessarily indicate the absence of a more general charitable commitment on part of the settlor. Such language may merely emphasize the intention of the settlor that the property should not be applied to other charitable purposes as long as it is practicable to apply it to the specific purpose. Tbus, such language alone does not sufficiently express an intention that ey pres should not apply and that the trust is to terminate if it should become illegal, impossible, or impracticable to carry out the particular purpose.

Even though the terms of a trust contain an express provision precluding the application of cy pres to alter the trust purpose, this does not prevent application of the so-called equitable-deviation doctrine of § 66 to modify the means by which the purpose is to be accomplished. c. Causes for failure of designated purpose. Under what circumstances will the particular purpose intended by the settlor not be carried out or continued, so that the court will either modify the trust cy pres or give effect to a trust provision calling for terminarion? It is not sufficient merely that it can be demonstrated that the trust funds could be better spent on some other purpose. Certainly, however, the particular purpose will fail if it is or becomes illegal or impossible to carry it out, or if the purpose is no longer charitable (as defined in § 28, see especially Comment a). The doctrine of cy pres may also be applied, even though it is possible to carry out the particular purpose of the settlor, if to do so would not accomplish the settlar's charitable objective, or would not do so in a reasonable way. In such a case, it is "impracticable" to carry out the particular purpose in the sense in which that word is used in this Section.

Thus, if a testator devises property in trust to establish and maintain an institution of a particular type but a similar institution already exists and is sufficiently effective that the testator's plan would serve no useful purpose, the intended purpose will not be enforced. Similarly, if a settlor provides for a trust to establish or support a school or other institution but prescribes a curriculum for the school or directs the conduct of the instiriition in a manner that prevents the offering of a proper education or § 67Failure of Designated Charitable Purpose: Tha..., Restatement (Third) of...

seriously undermines the usefulness of the institution, the court may modify the terms of the trust to allow a similar but more general charitable purpose to be accomplished.

If property is given in trust for a particular charitable purpose and the amount given is insufficient to accomplish the intended purpose in a socially useful manner, the specified purpose fails and may be modified cy pres in the absence of a trust provision preventing the court from doing so. Thus, for example, if the trustee is directed to erect a hospital but the trust assets are insufficient, the court may direct the trustee to apply the funds to enlarge an existing hospital.

If property is given in trust to be applied to a particular charitable purpose that cannot be carried out without the consent or cooperation of a third party, who refuses that consent or cooperation,the particular charitable purpose fails and, unless precluded by the terms of the trust, cy pres will be applied. Thus, if a testator devises property in tntst to erect a public library in a town provided the town agrees to accept and to maintain it, and the town refuses to do so, the property will be applied cy pres for a reasonably similar purpose. Or, if a testator leaves funds to a college in trust to provide scholarships solely for defined categories of students and the college refuses (or is legally unable) to accept the devise under those terms, the court will modify the terms of the devise to relieve it of the objectionable restrictions if to do so would suitably approximate the testator's intended purpose. See further Comment d and also § 28, Comment f, especially the third paragraph of each Comment.

c(I). Surplus funds. Another type of case appropriate to the application of cy pres, when not precluded by the terms of the trust, is a situation in which the amount of property held in the trust exceeds what is needed for the particular charitable purpose to such an extent that the continued expenditure of all of the funds for that purpose, although possible to do, would be wasteful. (The term "wastefuP' is used here neither in the sense of common-law waste nor to suggest that a lesser standard of merely "better use" will suffice.)

Faced with circumstances of the type required for cy pres intervention in a surplus-funds case, a court might broaden the purposes of the trust, direct application of the surplus funds to a like purpose in a different community, or otherwise direct the use of funds not reasonably needed for the original purpose to a different but reasonably similar charitable purpose.(On the result if cy pres modification is prohibited by the settlor, see § 8, Comment g, and also § 8, Illustration 18, illustrating the potentially challenging application of the resulting-trust doctrine in such cases.)

d. New purpose; manner ofcypres application. In applying the cy pres doctrine, it is sometimes stated that the property must be applied to a purpose as near as possible to that designated by the terms of the intended trust. Increasingly, however, courts have recognized (as does the rule of this Section) that the substitute or supplementary purpose need not be the nearest possible but one reasonably similar or close to the settlor's designated purpose, or "falling within the general charitable purpose" of the settlor. This is especially so when the particular purpose becomes impossible or impracticable of accomplishment long after the creation of the trust or when, among purposes reasonably close to the original, one has a distinctly greater usefulness than the others that have been identified. This more liberal application of cy pres is appropriate both because settlors' probable preferences are almost inevitably a matter of speculation in any event and because it is reasonable to suppose that among relatively similar purposes charitably inclined settlors would tend to prefer those most beneficial to their communities.

In framing a scheme for the application of property cy pres, the court will consider evidence suggesting what the wishes of the settlor probably would have been if the circumstances had been anticipated. Such an assessment may look to whatever evidence is available concerning the attitudes and interests that appear to have motivated the settlor's selection of the particular purpose. Thus, it would be especially appropriate to consult the donor if available. In other situations, the circumstances of the trust's creation may be revealing, as may the settlor's relationships, social or religious affiliations, personal background, charitable- giving history, and the like. For example, a settlor's adviser may be able to reveal that a devise to a particular institution for a specific project or purpose began with a desire to benefit that institution and was then shaped to address some institutional interest, need, or opportunity; or the opposite might be revealed, with the settlor having a strong desire to encourage a particular field of study or research, or a particular charitable activity, and then settling upon an institution that appeared suitable. In the former case, if the precise plan does not work out or the funds prove to be excessive for the purpose, a court would probably § G7Failure of Designated Charitable Purpose: The..., Restatement (Third) of...

decide to look for a different but related subject or activity at the chosen institution. In the latter case, the court would probably decide that the special interest of the settlor should be pursued at a nearby or comparable institution.

The cy pres power is vested in the court, not in the trustee ar the Attorney General, who is, however, a necessary party entitled to notice of the proceeding. Cy pres proceedings are normally initiated by trustees or Attorneys General, but they are occasionally brought by institutions or individuals having a special interest in the charitable purpose. (See generally § 94 on standing to enforce trusts. C£ Restatement Second, Trusts § 391.) In its effort to select a substitute purpose, the court may refer the matter to a master, who, after receiving evidence as well as suggestions from interested parties, will frame an alternative plan or two and submit a recommendation or recommendations to the court.

If under circumstances described in this Section a trustee (e.g., a recipient institution or community foundation), without prior court authorization, applies property to a purpose other than that designated in the terms of the trust, the trustee is subject to liability for breach of trusk If, however, the application made by the trustee is such as the court would have directed, the court may approve the application, and such approval will be as effective as though the court had authorized the application before it was made.

e. Gift to corporation or association. If a testator devises property to a charitable corporation or association that refuses to accept it, or that is incapable of taking ar holding it or is not in existence, the disposition will not fail if the testator manifested an intention to devote the property to charitable purposes and not merely to make a gift to the particular corporation or association. Thus, if the testator leaves money to a particular university to teach courses in dianetics, and the university refuses to accept the funds on that basis, the court may permit the legacy to be applied to the establishment of such a course in another university, assuming the settlor has not provided otherwise.

Similarly, if gifts are made to a charitable corporation that is subsequently dissolved, the doctrine of cy pres applies and the court may direct that the property be given to another corporation or association having similar purposes, in the absence of a contrary statute or provision in the terms of the gift. So too, if property is given in trust to be applied for the support of a particular insritution, and the institution subsequently merges with another established for similar purposes, the court will ordinarily permit the property to be used for the support of the new institution. f: Multiple settlors. If several persons contribute to a fund to be applied to a particular charitable purpose, and it is or becomes illegal, impossible, or impracticable to carry out the particular purpose, or the funds are or become excessive for the purpose, and if the doctrine of cy pres is not applicable, a resulting trust will arise in favor of the contributors or their successors in interest (see further § 8, Comment g). Ifsome of the fund has been expended, the contributors are entitled to share in the balance in proportion to their contributions. If some of the contributors cannot be ascertained, usually there will be a resulting trust of their shares for the State in the absence of applicable legislation on the matter.

Reporter's Notes on § 67

The comparable Sections of Restatement Second, Trusts, were §§ 399 and 400. They require a finding that the settlor had a "general charitable intent" in order to apply cy pres, rather than (as in this ~ 67) presuming the doctrine's applicability and requiring that a contrary intent be found in the terms of the trust to prevent its application.

See generally, on the cy pres doctrine, NA William F. Fratcher, Scott on Trusts §§ 399-400 (4th ed. 1989); and George G. Bogert &George T. Bogert, The Law of Trusts and Trustees §§ 431-441 (Rev. 2d ed. 1991).

Comment a:

§ 411. Modification or Termination of Noncharitable..., Unif.Trust Code § 411

Uniform Laws Annotated Uniform Trust Code(2000) (Refs & Annos) Article 4. Creation, Validity, Modification, and Termination of Trust (Refs & Annos)

Unif.Trust Code § 41i

§ 4ii. Modification or Termination of Noncharitable Irrevocable Trust by Consent.

Currentness

[(a)[A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries, even if the modification or termination is inconsistent with a material purpose of the trust.] [If, upon petition, the court finds that the settlor and all beneficiaries consent to the modification or termination of a noncharitable irrevocable trust, the court shall approve the modification or termination even if the modification or termination is inconsistent with a material purpose of the tn►st. A settlor's power to consent to a trust's modification or termination may be exercised by an agent under a power of attorney only to the extent expressly authorized by the power of attorney or the terms of the trust; by the settlor's [conservator] with the approval of the court supervising the [conservatorship] if an agent is not so authorized; or by the settlor's [guardian] with the approval of the court supervising the [guardianship] if an agent is not so authorized and a conservator has not been appointed. [This subsection does not a~ply to irrevocable trusts created before or to revocable trusts that become irrevocable before [the effective date of this [Code][amendment].]]

(b) A noncharitable irrevocable trust may be terminated upon consent of all of the beneficiaries if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust. A noncharitable irrevocable trust may be modified upon consent of all of the beneficiaries if the court concludes that modification is not inconsistent with a material purpose of the trust.

[(c) A spendthrift provision in the terms of the trust is not presumed to constitute a material purpose of the trust.]

(d) Upon termination of a trust under subsection (a) or (b), the trustee shall distribute the trust property as agreed by the beneficiaries.

(e) If not all of the beneficiaries consent to a proposed modification or termination of the trust under subsection (a) or (b), the modification or termination may be approved by the court if the court is satisfied that:

(1) if all of the beneficiaries had consented, the trust could have been modified or terminated under this section; and

(2) the interests of a beneficiary who does not consent will be adequately protected.

Credits As amended in 2004. § 411. Modification or Termination of Noncharitable..., Unif.Trust Code § 411

F.di[ors' Notes

COMMENT

This section describes the circumstances in which termination or modification of a noncharitable irrevocable trust may be compelled by the beneficiaries, with or without the concurrence of the settlar. For provisions governing modification or termination of trusts without the need to seek beneficiary consent, see Sections 412 (modification or termination due to unanticipated circumstances or inability to administer trust effectively), 414 (terminarion or modification of uneconomic noncharitable trust), and 416(modification to achieve settlor's tax objectives). If the trust is revocable by the settlor, the method of revocation specified in Section 602 applies.

Subsection (a) which was placed in brackets pursuant to a 2004 amendment, states the test for termination or modification by the beneficiaries with the concurrence of the settlor. For an explanation of why subsection (al has been placed in brackets, see the 2004 comment at the end of this section.

Subsection (b) states the test for termination or modification by unanimous consent of the beneficiaries without the concurrence of the settlor. The rules on trust termination in Subsections (a)-(b) carries forward the Clatlin rule, first stated in the famous case of Claflm v. Claflin, 20 N.E. 454(Mass. 1889). Subsection (c) addresses the effect of a spendthrift provision. Subsection (d) directs how the trust property is to be distributed following a termination under either subsection (a) or (b). Subsection (e) creates a procedure for judicial approval of a proposed termination or modification when the consent of less than all of the beneficiaries is available.

Under this section, a trust may be modified or terminated over a tnistee's objection. However, pursuant to Section 410, the trustee has standing to object to a proposed termination or modification.

The settlar's right to join the beneficiaries in terminating or modifying a trust under this section does not rise to the level of a taxable power. See Treas. Reg. Section 20.2038-1(a)(2). No gift tax consequences result from a termination as long as the beneficiaries agree to distribute the trust property in accordance with the value of their proportionate interests.

The provisions of Article 3 on representation, virtual representation and the appointment and approval of representatives appointed by the court apply to the determination of whether all beneficiaries have signified consent under this section. The authority to consent on behalf of another person, however, does not include authority to consent over the other person's objection. See Section 301(b). Regarding the persons who may consent on behalf of a beneficiary, see Sections 302 through 305. A consent given by a representative is invalid to the extent there is a conflict of interest between the representative and the person represented. Given this limitation, virtual representation of a beneficiary's interest by another beneficiary pursuant to Section 304 will rarely be available in a trust termination case, although it should be routinely available in cases involving trust modification, such as a grant to the trustee of additional powers.lf virtual or other form of representation is unavailable, Section 305 of the Code permits the court to appoint a representative who may give the necessary consent to the proposed modification or termination on behalf of the minor, incapacitated, unborn, or unascertained beneficiary. The ability to use virtual and other forms of representation to consent on a beneficiary's behalf to a trust termination or modification has not traditionally been part of the law, although there are some notable exceptions. Compare Restatement(Second) Section 337(1)(1959) (beneficiary must not be under incapacity), with Hatch v. Riggs National Bank, 361 F.2d 559(D.C. Cir. 1966)(guardian ad litem authorized to consent on beneficiary's behalf.

Subsection (a) also addresses the authority of an agent, conservator, or guardian to act on a settlor's behalf. Consistent with Section 602 on revocation or modification of a revocable trust, the section assumes that a settlor, in granting an agent general authority, did not intend for the agent to have authority to consent to the termination or modification of a trust, authority that could be exercised to radically alter the settlor's estate plan. In order for an agent to validly consent to a termination or § 411. Modification or Termination of Noncharitable..., Unif.Trust Code § 411 modification of the settlor's revocable trust, such authority must be expressly conveyed either in the power ar in the terms of the trust.

Subsection (a), however, does not impose restrictions on consent by a conservator or guardian, other than prohibiting such action if the settlor is represented by an agent. The section instead leaves the issue of a conservator's or guardian's authority to local law. Many conservatorship statutes recognize that termination or modification of the settlor's trust is a sufficiently important transaction that a conservator should first obtain the approval of the court supervising the conservatorship. See, e.g., Unif. Probate Code Section 5-411(a)(4). Because the Uniform Trust Code uses the term "conservator" to refer to the person appointed by the court to manage an individual's property (see Section 103(4 5)), a guardian may act on behalf of a settlor under this section only if a conservator has not been appointed.

Subsection (a)is similar to Restatement(Third) of Trusts Section 65(2)(Tentative Draft No. 3, approved 2001), and Restatement (Second) of Trusts Section 338(2)(1959), both of which permit termination upon joint action of the settlor and beneficiaries. Unlike termination by the beneficiaries alone under subsection (b), termination with the concurrence of the settlor does not require a finding that the trust no longer serves a material purpose. No finding of failure of material purpose is required because all parties with a possible interest in the trust's continuation, both the settlor and beneficiaries, agree there is no further need for the trust. Restatement Third goes further than subsection (b) of this section and Restatement Second, however, in also allowing the beneficiaries to compel termination of a trust that still serves a material purpose if the reasons for termination outweigh the continuing material purpose.

Subsection (b), similar to Restatement Third but not Restatement Second, allows modification by beneficiary action. The beneficiaries may modify any term of the trust if the modification is not inconsistent with a material purpose of the trust. Restatement Third, though, goes further than this Code in also allowing the beneficiaries to use trust modification as a basis for removing the trustee if removal would not be inconsistent with a material purpose of the trust. Under the Code, however, Section 706 is the exclusive provision on removal of trustees. Section 706(b)(4) recognizes that a request for removal upon unanimous agreement of the qualified beneficiaries is a factor for the court to consider, but before removing the trustee the court must also find that such action best serves the interests of all the beneficiaries, that removal is not inconsistent with a material purpose of the trust, and that a suitable cotrustee or successor trustee is available. Compare Section 706(b)(4), with Restatement (Third) Section 65 cmt. f(Tentative Draft No. 3, approved 2001).

The requirement that the trust no longer serve a material purpose before it can be terminated by the beneficiaries does not mean that the trust has no remaining function. In order to be material, the purpose remaining to be performed must be of some significance:

Material purposes are not readily to be inferred. A finding of such a purpose generally requires some showing of a particular concern or objective on the part of the settlor, such as concern with regard to the beneficiary's management skills, judgment, or level of maturity. Thus, a court may look for some circumstantial or other evidence indicating that the trust arrangement represented to the settlor more than a method of allocating the benefits of property among multiple beneficiaries, or a means of offering to the beneficiaries (but not imposing on them) a particular advantage. Sometimes, of course, the very nature or design of a trust suggests its protective nature or some other material purpose.

Restatement(Third) of Trusts Section 65 cmt. d (Tentative Draft No. 3, approved 2001).

Subsection (c) of this section deals with the effect of a spendthrift provision on the right of a beneficiary to concur in a trust termination or modification. By a 2004 amendment, subsection (c) has been placed in brackets and thereby made optional. Spendthrift terms have sometimes been construed to constitute a material purpose without inquiry into the intention of the particular settlor. For examples, see Restatement(Second) of Trusts Section 337(1959); George G. Bogert &George T. Bogert, The Law of Trusts and Trustees Secrion 1008 (Rev. 2d ed. 1983); and 4 Austin W. Scott &William F. Fratcher, The Law of Trusts Section 337 (4th ed. 1989). This result is troublesome because spendthrift provisions are often added to instruments § 411. Madification or Termination of Noncharitable..., Unif.Trust Code § 411 with little thought. Subsection (c), similar to Restatement(Third) of Trusts Section 65 cmt. e (Tentative Draft No. 3, approved 2001), does not negate the possibility that continuation of a trust to assure spendthrift protection might have been a material purpose of the particular settlor. The question of whether that was the intent of a particular settlor is instead a matter of fact to be determined on the totality of the circumstances.

Subsection (d) recognizes that the beneficiaries' power to compel termination of the trust includes the right to direct how the trust property is to be distributed. While subsection (a)requires the settlor's consent to terminate an irrevocable trust, the settlor does not control the subsequent distribution of the trust property. Once termination has been approved, how the trust property is to be distributed is solely for the beneficiaries to decide.

Subsection (e), similar to Restatement (Third) of Trusts Section 65 cmt. c (Tentative Draft No. 3, approved 200] ), and Restatement(Second) of Trusts Sections 338(2)& 340(2)(1959), addresses situations in which a termination or modification is requested by less than all the beneficiaries, either because a beneficiary objects, the consent of a beneficiary cannot be obtained, or representation is either unavailable or its application uncertain. Subsection (e) allows the court to fashion an appropriate order protecting the interests of the nonconsenting beneficiaries while at the same time permitting the remainder of the trust property to be distributed without restriction. The order of protection for the nonconsenting beneficiaries might include partial continuation of the trust, the purchase of an annuity, or the valuation and cashout of the interest.

2003 Amendment. The amendment, which adds the language "modification or" to subsection (a),fixes an inadvertent omission. It was the intent of the drafting committee that an agent with authority or a conservator or guardian with the approval of the court be able to participate not only in a decision to terminate a trust but also in a decision to modify it.

2004 Amendments.

Section 411(a2, Section 301(d), and Conforming Changes to Sections 301(c and 410(b).

Section 411(al was amended in 2004 on the recommendation ofthe Estate and Gift Taxation Committee of the American Colley of Trust and Estate Counsel(ACTEC). Enacting jurisdictions now have several options all of which are indicated by brackets:

• delete subsection (a) meaning that the state's prior law would control on this issue.

• require court approval of the modification or termination.

• make the provision prospective and applicable only to irrevocable trusts created on or after the effective date or to revocable trusts that become irrevocable on or after the effective date of the provision.

• enact subsection (a in its original form.

Section 4110 as originally drafted did not require that a court improve a joint decision of the settlor and beneficiaries to terminate or modify an irrevocable trust. The ACTEC Committee was concerned that:

• Section 411(a), without amendment, could potentially result in the taxation for federal estate tax purposes of irrevocable trusts

created in states which previously required that a court approve a settlor/beneficiary termination or modification; and

• Because of the ability of a settlor under Section 301 to represent and bind a beneficiary with respect to a termination or modification of an irrevocable trust, Section 411(a) might result in inclusion of the trust in the settlar's gross estate. New Section 3010 eliminates the possibility of such representation. § 411. Modification or Termination of Nancharitable..., Unif.Trust Code § d1i

The Drafting Committee recommends that all jurisdictions enact the amendment to Section 301(d~. The Drafting Committee recommends that jurisdictions conform Section 41] (a) to prior law on whether or not court approval is necessary for the settlor and beneficiaries to jointly terminate or modify an irrevocable trust. If prior law is in doubt the enacting jurisdiction mash to make Section 4110 p~ rosnective only. The enactingjurisdiction may also elect to delete Section 4ll(al.

States electing to delete Section 411(a) should also delete the cross-references to Section 4]1 found in Sections 301(c) and 410~b,1. These cross-references have therefore been placed in brackets. States electing to delete Section 411(al should also not enact Section 301(d), which for this reason has similarly been placed in brackets.

Section 411(c)

Section 411~c1, which bathe 2004 amendment was placed in brackets and therefore made optional, provides that a spendthrift provision is not presumed to constitute a material purpose of the trust. Several states that have enacted the Code have not aereed with the provision and have either deleted it or have reversed the presumption. Given these developments, the Drafting Committee concluded that uniformity could not be achieved. The Joint Editorial Board for Uniform Trusts and Estates Acts, however, is of the view that the better approach is to enact subsection (c) in its original form for the reasons stated in the comment to this Section.

LAW REVIEW AND JOURNAL COMMENTARIES

Conditional Love: Incentive Trusts and the Inflexibility Problem. Joshua C. Tate. 41 Real Prop. Prob. & Tr. J. 445 (Fall 2006). New Uniform Trust Code. Charles A. Collier, Jr. 12 Experience 34 (2001). UTC: Help for Beneficiaries and Their Attorneys. Joseph Kartiganer and Raymond H. Young. 17 Prob. &Prop. l 8 (March/ Apri12003).

LIBRARY REFERENCES

Trusts ==- 58, 59, 61(3).

Westlaw Topic No. 390.

C.J.S. Trusts §§ 96 to 116, 118 to 127.

Notes of Decisions (9)

Copr.(C) Thomson Reuters 2013. All rights reserved. Official Text and Comments Reproduced with Permission of the National Conference of Commissioners on Uniform State Laws. Current through 2012 Annual Meeting of the National Conference of Commissioners on Uniform State Laws.

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uneconomic uneconomic

trust trust

modify modify

purpose).

accomplishment accomplishment

to to

Cal. Cal.

existing existing U'I'C U'I'C

provision; provision;

would would

not not

purposes"; purposes";

pernut pernut

(iJTC).

or or

provision; provision; UTC UTC

terminate terminate

may may

permit permit

(corporate (corporate

wstee wstee

order order

small small

39 39

terminate terminate

its its

or or

interests interests

beneficiaries beneficiaries

purposes"), purposes"),

trust trust

its its

SCOTT SCOTT

termination termination

UTC UTC

uneconomical).

may may

ternunate ternunate

too too

may may

impair impair

LJTC LJTC

of of

may may

terminate terminate

may may

-~n -~n

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trust trust

under under

administration administration

14-107 14-107

are are

Gavid, Gavid,

substantially substantially

o, o,

may may

(modified (modified

terminate terminate

§ §

impair impair

25 25

insufficient insufficient

of of

$20,000, $20,000,

may may

v. v.

unless unless

(modified (modified

may may

19-1304.14 19-1304.14

or or

the the

(court (court

§ §

(couR (couR

(court (court

(vests (vests

(court (court

§ § trust trust

is is

(trustee (trustee

(court (court

414 414

administration administration

may may

of of

(trustee (trustee

~ ~

(modified (modified

cost cost

than than

ascertainable ascertainable (court (court

beneficiaries' beneficiaries'

5.5 5.5

203, 203,

the the

(modified (modified uneconomical uneconomical

of of

$100,000).

(court (court

defeat defeat

Ann. Ann.

substantially substantially

the the

9:2026 9:2026

is is

of of

&Trusts &Trusts

(trustee (trustee

$75,000).

less less

ch. ch.

386.185 386.185

~ ~

and and

18-B, 18-B,

practical, practical,

(court (court

45a-484 45a-484 cost cost

to to

or or

91-9-I07 91-9-I07

28-73-414 28-73-414

than than

§ §

15408 15408

Finkbeiner Finkbeiner

is is

propeRy propeRy

accomplishment accomplishment

than than

§ §

$100,000).

§ §

$100,000).

substantially substantially

72-33-412 72-33-412

administration administration

§ §

Est. Est.

53-12-152 53-12-152

§ § value).

dt. dt.

Code Code

objects, objects,

would would

§ §

X356.4-414 X356.4-414

58a-414 58a-414 and and

and and

§ §

Ann. Ann.

737.402(3) 737.402(3)

under under

or or

Laws Laws

of of

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less less

g g ILCS ILCS

§ §

Ann. Ann.

less less

§ §

Stat. Stat.

than than

defeat defeat than than

value value

[rust [rust

Ann. Ann.

low low

Ann. Ann.

relation relation

Code Code

Ann. Ann.

-trustees -trustees

Mn., Mn.,

30-~-3-24.5 30-~-3-24.5

Ann. Ann.

if if

S[at. S[at.

Ann. Ann.

760 760

settlor settlor Gen. Gen.

accomplishment accomplishment

15-7-402(4) 15-7-402(4)

5tat 5tat

§ §

the the

costs costs

in in Stat. Stat.

less less

633A.2205 633A.2205

$20,000); $20,000);

continuation continuation

assets assets

Ann. Ann.

less less

Ann. Ann.

worth worth

defeat defeat

Gen. Gen.

§ §

worth worth

impair impair

if if if if

Sta[. Sta[.

if if

Code Code

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Prob. Prob.

of of

equitable equitable

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spendthrift).

Columbia: Columbia:

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that that

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with with

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continuation continuation

wst).

under under

of of

S.H.A. S.H.A.

worth worth

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Code Code

Rev. Rev.

than than

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if if

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Code Code

and and

value value

approval). ibution ibution

terminated; terminated;

charitable, charitable,

trust trust

impair impair

trust trust

otherwise otherwise

$100,000 $100,000

less less

with with

$100,000 $100,000

assets assets

is is

uneconomically uneconomically

usaets usaets

with with

if if

assets assets

be be

the the

disu

California: California:

Connecticut: Connecticut:

Arkansns: Arkansns:

Florida.• Florida.•

District District

Georgia: Georgia:

Idaho: Idaho:

lndinncc lndinncc

substantially substantially

/!linois: /!linois:

Kansns: Kansns:

lowu: lowu:

Kenn~cky: Kenn~cky:

Maine: Maine:

Montana: Montana:

Mun~lund.• Mun~lund.• Louis•imia: Louis•imia:

33.3 33.3

Massachusetts: Massachusetts:

Missouri: Missouri: Mississippi: Mississippi:

continuance continuance

§ §

becomes becomes

with with

trust trust

or or

temunation temunation

trust trust

over over

would would

if if

spendthrift spendthrift

minate minate

with with

involved involved

that that

less).

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icantly icantly

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oust oust with with worth worth

may may

$100,000 $100,000

even even :u~d :u~d

the

see

the

.. ..

one

The

had

with

they

have

trust

33.4

of of

of of to to

things

permit

would

[he [he

then, then,

justify

Resta-

for for

one one

§ §

(1959).

powers

make make

that that

more more

Restate-

only only

to to

particular

would would

instances,

vary vary

harm. harm.

to to

168 168

than than

trusts trusts how how

dispositive

settlor settlor

is is

or or

a a

impairing) sort, sort,

category category

when when

g g

as as

with with vests vests

reformation

to to principal principal

two two

to to

interest interest

support support all all

insufficient insufficient

of of

Second Second

the the

of of

provide provide

that that

such such so so

or or

this this

administration,

way, way, one one

easier easier

nor nor

principal," principal,"

there there

trustees' trustees' settlor settlor and and

be be

time time

inconsistent inconsistent

the the

small small

Trusts Trusts

first first

known known

of of

is is

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and and on on

or or

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to to

may may

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is is

couRs couRs

future future

it it

almost almost the the

in in

which which

the the

"if "if

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meant meant

when when

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support support

case case

only only

dispensed dispensed

acknowledged acknowledged

trust trust

First First

out out

the the

rather rather [he [he

a a beneficiary beneficiary

substanrially substanrially

in in

income income

trust trust

that that

provisions provisions

modified, modified,

important important

point point

only only

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had had

In In

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that that

or or

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trust trust

respect respect

income income

(Second) (Second)

modification modification

that that

have have

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modification modification

a a

Because Because

Yet, Yet, turns turns

of of

is is

support, support,

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for for

Certainly Certainly

apply apply

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literally, literally,

she she

e e

permit permit

to to

...before ...before

of of

rest, rest,

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with with

beneficiary's beneficiary's

to to

such such no no

was was

or or

to to

at at

is is

the the

he he of of

gladly gladly

other other

beneficiaries. beneficiaries.

diapositive diapositive

taken taken

provisions provisions

neither neither the the

defeating defeating

impact impact

Restatements Restatements

Nor Nor

change change

income income if if

terms terms

unfulfilled. unfulfilled.

permissible permissible 2173 Restatement Restatement

of of

respect respect different different

specified specified

formulating formulating

of of

the the

basis.

trust, trust,

intention. intention.

trustee trustee the the

a a

thereby.i

for for

one one

there there

go go

rule, rule,

the the

bit bit

of of

both both for for provisions provisions

deviation deviation

beneficiary. beneficiary.

beneficiary beneficiary

of of

would would

trust trust

the the

actual actual

beneficiary's beneficiary's

were were

a a

with with

a a

(1935); (1935);

least least

of of this this

such such

(short (short

Certainly, Certainly,

one one the the

of of

needs needs

enjoyment enjoyment

the the

income income

at at the the

purposes. purposes.

diapositive diapositive

income income

168 168

beneficiary.

disinclination disinclination

more more

only only

provisions, provisions,

probable probable

impaired impaired

While While

direct direct

§ §

of of

in in

situation, situation,

MODIFICATION MODIFICATION

the the

or or

because because

widespread widespread

example, example,

for for

become become

the the

allow allow

accumulation accumulation

a a

only only

or or

one one

certainly certainly

trust trust

If If

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diapositive diapositive

responsible responsible

to to

variations variations

of of

is is

to to

support support

modification modification support support

Trusts Trusts

best, best,

strong strong

[was] [was]

treatment treatment

because because

one one for for

For For

see see had had

of of

intended. intended.

AND AND

the the

just just

such such

the the

a a

of of

beneficiary, beneficiary,

portion portion

possible possible

to to

sort sort

simply simply

not not

actual actual

such such

of of

and and

those those

a a

In In

dispositive dispositive

out. out. there there

use use

their their

"permit "permit

almost almost

accomplishing accomplishing

one one

have have

appropriate. appropriate.

entitled entitled please please

of of

from from

merely merely

any any

judicial judicial

adequately adequately

were were

at at

the the

that that

did did

fact, fact,

cramped cramped

turn turn

necessary necessary

to to

prefer prefer

more more

be be

beneficiary. beneficiary.

that that

on on

of of

When When

than than

reason reason

beneficiary beneficiary suggests suggests

might might

likelihood likelihood

that that In In

settlor settlor was] was]

Restatement Restatement

settlor's settlor's

available available current current

beneficiary's beneficiary's

or or

the the

beneficiaries beneficiaries

8 8

all all

change change

would would more more

payment payment piOVlde piOVlde beneficiary, beneficiary,

the the

doubt doubt

~e ~e

beneficiary. beneficiary.

same same

more more the the the the

only only

trusts trusts a a

other other

changes changes

insisted insisted

she she

Cements Cements for for

rarely rarely menu' menu'

court court

clear clear

was was

terms terms itself itself

ceased ceased

in in

the the

available available

TERMINATION TERMINATION

one one

effective effective

+^`'

a of

yet

cir-

the

less

was

two

cir-

any

than

pur-

b b

Trusts

trust

under

in in

(1959).

of of direct

Case Case

to to

of of

on on lack lack

account

circum-

changes

TRUSTS

interests

to to

first first

in in the the

powers.

Omitted Omitted

167 167

glance glance

trust trust

accomplish-

trust trust

oversight.

no no

§ §

of of

on on

might might

compliance

the the

permitting permitting

ON ON

best best

no no

the the

concept;

the the

change change unanticipated

neither neither

owing owing

uneconomic.

somewhat somewhat

when when

termination termination

only only

consent, consent,

of of a a

with with (Second) (Second)

reformation reformation

or or

willing willing

of of

Trusts Trusts

of of

if, if, the the

available available

range range

terminology terminology

what what

be be

trustees' trustees'

(1959).

of of

that that

of, of,

nor nor

surely surely

Modification Modification settlor, settlor,

continuing continuing

on on

to to

Under Under both both

need need

336 336

been been

which which

trust trust

("Termination ("Termination

ASCHER ASCHER

that that

serve serve

or or

separate separate

unanticipated unanticipated

become become

reformation reformation

the the clear clear

a a

was was

termination termination

to to

would would

336 336 to to

335, 335,

the the

Restatement Restatement

One One

directing directing

when when

(Second) (Second)

because because

long long

or or

hand, hand,

beneficiary beneficiary

law, law,

as as had had

or or

thought thought

for for

AND AND

~§ ~§

by by

Trusts. Trusts.

staggering staggering

of of

or or

relating relating

in in

This This

of of

were were

comment comment

~ ~

modification modification

of of

the the

that, that,

have have

a a

extent extent

the the

Revocation Revocation

also also

modification modification

illegal), illegal),

(1935); (1935);

trust. trust.

other other

accomplishment accomplishment

or or

Trusts Trusts

in in

term term

of of

is is

a a

court court

response response or or

SCOTT SCOTT

the the

see see

a a

was was of of

Restatement Restatement

the the

the the the the

(providing (providing

purposes, purposes,

a a

illegal, illegal,

see see

of of

in in

provisions provisions

to to

courts courts

absence absence

2172

deviations deviations

more more

neither neither

modification modification

or or

anticipated anticipated 335 335

administration administration

On On

thing thing

as as

generally.' generally.'

from from

the the

trust trust

("Power ("Power

the the

as as

~§ ~§

be be

"reformation" "reformation"

(1935); (1935);

often often

Restatement Restatement

impair impair impair impair

(Second) (Second)

Restatements Restatements

terms terms

nor nor

impossible impossible

one one

in in

ReFormaaon") ReFormaaon")

332 332

the the ternunation ternunation

happened happened

else. else.

trust trust

treatise treatise

L67 L67

for for

either either

justified justified

such such

so so

essentially essentially

may may

seen, seen,

§§ §§

as as

§ §

Trusts Trusts

the the

and and

deviate deviate

is is

diapositive diapositive

both both

was was

had had

this this

for for we we

of of

this this impossible impossible

33.2.

Second Second

also also

to to

becomes becomes

known known

of of

Trusts Trusts

§ § basis, basis,

Trusts Trusts

as as

further further

Restatements, Restatements,

Restatement Restatement

that that from from

provide provide

of of

available, available,

the the to to of of

circumstances circumstances

trust's trust's

continued continued

something something

have have

substantially substantially

all all

conceptualized conceptualized

sometimes sometimes

or or

two two

supra supra

because because

provide provide

ib.~t.

tb.a. extent, extent,

here, here,

thought thought

did did

33.3.

trustee trustee

however, however,

~~~Rescission ~~~Rescission

become become

was was

as as

or or

the the

~ ~

3 3

we we

neither neither

portion portion purposes purposes

Restatement Restatement

(1935); (1935);

to to

be be

deviate deviate

first first

'see 'see

when when (1959).

see see

as as

First First

been been

the the

333 333

when when

has has

Restatements Restatements

some some

~, ~,

trus[ trus[

widespread widespread

This, This,

to to

generally, generally,

Restatement Restatement

~u~,-~ ~u~,-~

sup~o sup~o

Restuteinent Restuteinent

as as

333 333

the the

defeat defeat

defeat defeat beneficiaries.

we we

the the

3 3

of of

failed failed To To

of of

two two

have have

33.x. 33.x.

Co►ripare Co►ripare

Se~e Se~e

See See

see see

relevant relevant

substance, substance,

7 7

unan[icipated unan[icipated =

`see.,~uprr, `see.,~uprr,

9 9

33_, 33_,

the the

permit permit

33.4 33.4

rst rst

' '

ment ment

Mi~cake'~ Mi~cake'~

~0 ~0 Emergency") Emergency")

both both available available Under Under

Restatements Restatements

of of

cumstances, cumstances,

accurately accurately that that

the the Thuti, Thuti,

trustee trustee

circumstances circumstances

would would

modification modification

of of

on on

sort sort

would would

stances stances

poses, poses, poses. purposes purposes § §

justification, justification, either either

Likewise, Likewise,

or or

cumstances cumstances f f

168

(Ill.

was

and

429.

was first

Div.

vary

33.4

trust

uff uff

nJf nJf court

§ §

of of

1962).

future

§ §

a a

trust trust

(1807).

870 870

statute).

to to

the the

A.C. A.C.

Abseil Abseil

a a

the the

of of

purposes,

law), law),

refused refused

to to

Iaw), Iaw),

(App. (App.

trustee trustee

support support

and and

(1948).

202 202

by by

Tntsts Tntsts

interest interest

education education

(Minn. (Minn.

the the

that that

564 564

N.E.?d N.E.?d

the the

(Ga. (Ga.

of of

(Ga. (Ga.

prior prior

consent, consent,

[1954] [1954]

trust trust

court court

created created

1328 1328 Ves. Ves.

terms terms

811 811

1931).

their their

needs needs

106 106

for for

declined declined

14 14

death.

the the

her her

death, death,

1933).

1945) 1945)

been been The The

1945) 1945)

Beneficiary, Beneficiary,

(1959).

for for

1934).

3 3

created created

her her

testator testator

or or

N.Y.S.2d N.Y.S.2d

illustrated illustrated

25. 25.

Div. Div. N.W.2d N.W.2d

has has

(Second) (Second)

Div. Div.

(Mich. (Mich.

Chapman, Chapman,

A.L.R.2d A.L.R.2d

Rives, Rives,

Ct. Ct.

(Ky. (Ky.

wife's wife's

the the

at at

L954). l l

current current

Barlow, Barlow,

v. v.

209 209 (statutory). his his

income income

illus. illus.

As As

v. v.

Income Income

further further

beneficiary's beneficiary's

(trust (trust

116 116

Upon Upon

206 206

887 887

invasion invasion

v. v.

the the

1924).

diapositive diapositive

& &

of of

generally generally

1931).

(App. (App.

view view

to to

(App. (App.

the the

b b (1959).

of of

Ca., Ca.,

(Sun. (Sun.

H.C. H.C.

1934).

child child

Tree Tree

1942) 1942)

1962), 1962),

d d

(1959).

1954) 1954)

a, a,

the the

3~0 3~0

N.W. N.W.

330 330

Errat Errat

Regard, Regard,

other other

c c

540 540

(Or. (Or.

before before

1887).

Ct. Ct.

Behalf Behalf

S.W.2d S.W.2d

Chapman Chapman

without without

Restatement Restatement

(Tenn. (Tenn.

Whelan, Whelan,

have have

Trust Trust

each each

invasion. invasion.

power power

cmt. cmt.

apply apply

(Ont. (Ont.

likely likely

(Wis. (Wis.

238 238

i~t i~t

S.2d S.2d

(Pa. (Pa.

(Wis. (Wis.

a a

of of

the the

79 79 755 755

cmts. cmts.

6l 6l

of of

vary vary

77tat 77tat

cmt. cmt.

to to

& &

(1867); (1867);

(Ill. (Ill.

is is to to

beneficiary. beneficiary.

213 213

if if

beneficiary's beneficiary's N.Y.S. N.Y.S. 886 886

(1805); (1805);

Mfrs. Mfrs. in in

(Burr. (Burr.

443 443

705 705

Co., Co.,

N.Y. N.Y.

traditional traditional

168 168

N.Y.S.2d N.Y.S.2d

with with

l68 l68

Will Will

168 168

children children

P.2d P.2d

(1886); (1886);

239 239

840 840

2175

S.W. S.W. v. v.

(1935); (1935);

courts courts

§ §

was was

§ §

Long, Long,

~ ~

power power

rule, rule, 56 56

3 3

961 961 56 56

273 273

604 604

the the

one one

562.

a a

the the

N.W. N.W.

Ill. Ill.

A.2d A.2d

v. v.

229 229

Principal Principal

even even

Trust Trust

D.L.R. D.L.R.

270 270

168 168

principal principal

N.E. N.E.

the the

15 15

Co., Co.,

Under Under

1 1

of of

Co., Co.,

N.W.2d N.W.2d

D. D.

§ §

43 43

Ves. Ves.

beneficiary, beneficiary,

I.R. I.R.

for for

variation variation

Trusts Trusts

with with

107 107

255 255

Trusts Trusts

children, children, 14 14

Trusts Trusts

than than

7 7

the the

Instrument Instrument

when when

trustee trustee

11 11

of of

Hoesen, Hoesen,

Ch. Ch.

of of

general general

N.Y.S.2d N.Y.S.2d

the the

Rapids Rapids

Trust Trust

of of Trus[ee Trus[ee

life, life,

Trust Trust

MODIFICATION MODIFICATION

a a

32 32

them.

Werbelovsky Werbelovsky

the the

Trusts Trusts

[1955] [1955]

other other

Trusts,

[1943] [1943]

Trust Trust

&Trust &Trust

Hamilton, Hamilton,

Estate, Estate,

Van Van

Invasion Invasion Riggs, Riggs,

Rhoads, Rhoads,

for for

more more

North. North.

property, property,

235 235

Adams, Adams,

principal principal

if if

that that

as as

of of

Guar. Guar.

of of

testator's testator's v. v.

of of

v. v.

Guar. Guar.

however, however,

share share

Trusteeship Trusteeship

of of

except except

is is

Kebble, Kebble,

of of

Grand Grand

of of

any any

v. v.

1946).

AND AND

wife wife

a a

(Second) (Second)

v. v.

Title Title

(Second) (Second)

re re

1946); 1946);

v. v.

(Second) (Second)

the the

Wright, Wright,

Collins, Collins,

trust trust

Bosler Bosler

impair impair

v. v.

O'Neill, O'Neill,

Annot., Annot.,

such such

his his

to to

least least

Thus, Thus,

!n !n

re re

pane pane

re re pay pay

Kramon, Kramon,

Estate Estate

there there

Matter Matter

Estate Estate

re re

terms terms to to

to to

Stewart Stewart

Zinsmeister's Zinsmeister's

16 16

Post Post

Rhoads Rhoads

Smith Smith

at at

the the

Smith Smith

(N.Y. (N.Y.

!n !n

to to are are

(N.Y. (N.Y.

Ex Ex

!n !n of of

Provision Provision

Longwith Longwith

Lent Lent

invasion invasion

/n /n

deprive deprive

46 46

in in

46 46

Restatement Restatement

to to

income income

an an

York: York:

than than

not, not,

York: York:

and and

York: York:

Restatement Restatement

to to

When When

generally generally

Restatement Restatement

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1952).

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pay pay

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68 68

1961).

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68 68

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127 127

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1939).

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1913).

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38 38

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1929).

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1931); 1931);

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1961) 1961)

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17 17

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242 242

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estate,

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1995), 1995),

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TERMINATION TERMINATION

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TRUSTS

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383 383

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Miiinesorn: Miiinesorn:

Illinois: Illinois: Ser Ser

re re

In In

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N.W.?d N.W.?d

33.4 33.4

6 6

text).

other other

later later

initial initial

!n !n grandchildren. grandchildren.

(Wis, (Wis, rzmainder rzmainder

entitled entitled the the

the the

not not

ification ification

principal principal

before before

invasion invasion

else, else,

attained attained

and and

principal principal § §

an an terms terms

terms terms invasion invasion

no[

Life

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pay pay

ben-

into

Rev.

33.4

would

court

Trusts

do do

occur

of of

to to

Powers

§ §

(1956); (19521);

L. L.

to to

primary

invade

Hastings

college

wstee wstee of of

to to

and and

principal

the the

to to

18 18

907 907

(1984).

268 268

Puyments Puyments

Restatement

the the

authorized

his his

trust trust

Donnelly Donnelly

beneficiary,

expressly expressly

of of

Brhalf Brhalf

the the

N.Y.U. N.Y.U.

957 957

was was

emergencies,

inducted inducted

in in

Rev. Rev.

trustee trustee

(Third) (Third)

in in

Language Language

wife/income wife/income

testator's testator's

beneficiaries.'

on on

Trusts, Trusts,

32 32

needs).

Dispositive Dispositive

trustee trustee

beneficiaries beneficiaries L. L.

that that Time Time

school, school, $800,000 $800,000

(1959); (1959);

Rev. Rev.

A.L,R.2d A.L,R.2d

at at

of of

his his

failed failed

5 5

been been

U. U.

of of or or

divide divide

her her

text).

of of

the the L. L.

and and

[he [he

46 46

authorizing authorizing

other other

Annot.. Annot..

law law

complete complete

to to

Law Law

of of

sometimes sometimes

for for

the the

payment payment

1948).

propeRy propeRy

by by

Nw. Nw.

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had had

illus. illus.

Fla. Fla.

of of

Principal Principal

accomplish accomplish

to to

Restatement Restatement the the

treatise, treatise,

Similarly, Similarly,

Trust, Trust,

d, d,

53 53

Amounr Amounr

liability liability

U. U.

were were

no no

to to

in in

his his

some some

directed directed

trust trust

of of

have have

unanricipated unanricipated

29 29

support support

death, death, (1958).

this this

(1969); (1969);

allowed allowed 2002) 2002)

(citing (citing

(N.H. (N.H.

36 36 ta~c ta~c

year year

him him

provide provide

instrument instrument

cmt. cmt.

the the

a a

of of

left left

invade invade

of of

Trust, Trust,

34.4. that that

(1959); (1959);

Ct. Ct.

268 268

to to

her her

359 359

the the

when when Term Term

there there

641 641

d d

§ §

Administrative Administrative

1887).

to to

168 168

grandson grandson

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unitrust, unitrust,

J. J.

1965) 1965)

court court

the the

courts courts

Regarding Regarding § §

Deviation Deviation

faced faced

testator testator

for for

to to

varied varied

purpose.

trust trust

Haw. Haw.

of of

light light

review review

A.2d A.2d

cmt. cmt.

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enable enable

upon upon

infra infra

the the

a a

Approach, Approach,

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the the

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only only

testator testator

Right Right

(Md. (Md. & &

42 42

the the though though

56 56 in in

2179

trust trust

879.

168 168

to to

directed directed

Terms Terms

840 840

see see

governing governing

904 904

Trusts Trusts

court court

settlor settlor

resulting resulting

Begleiter, Begleiter,

insufficient insufficient

§ §

and, and,

Terns Terns

Niles' Niles'

384 384

30 30

the the

of of

Ch. Ch.

(2003).

the the

Prob. Prob.

the the

but but

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the the

N.E. N.E.

even even

1 1

2 2 primary primary

28 28

Caurt Caurt was was

Distributive Distributive

principal principal

living. living.

life life

Realistic Realistic

terminate terminate

Breault, Breault,

it. it. Because Because

A.2d A.2d

Wolcott, Wolcott,

Dean Dean

14 14 Trusts Trusts

of of

Implying Implying

purpose, purpose, a a

widow, widow,

v. v.

of of

to to

(1970); (1970);

N.Y.S.2d N.Y.S.2d that that

and and

Prop. Prop.

illus illus

for for

of of

result, result,

cover cover

ns ns

pay pay

incapacity, incapacity,

then then

see see

210 210

completing completing

testamentary testamentary

a a grandson, grandson,

1947).

b, b,

MODIFICATION

(Second) (Second) [1901] [1901]

to to

Co. Co.

309 309 income income

to to

the the

Distributive Distributive

745 745

1948). 1945. 1945.

fact fact

Wolcoit,

Powerof Powerof

Riggs, Riggs,

court court

Real Real

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As As

Toward Toward

Washington,

legal legal

a a

his his testator's testator's

4 4

v. v. Principle Principle

cmt. cmt.

the the

education, education,

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widow widow

Petition Petition

Ligon, Ligon,

the the

Trust Trust

31, 31,

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of of

AND AND

house house

convert convert

Wolcott, Wolcott, (Second) (Second)

invasion invasion

of of

to to

(2003).

(Wash. (Wash.

66 66

the the

Walker, Walker,

invasion, invasion,

v. v. (N.H. (N.H.

the the

taxes. taxes.

re re

Law: Law: to to

§ § 2 2

Annot., Annot.,

his his

her; her;

Instrument Instrument

of of Report, Report,

his his A.L.R.3d A.L.R.3d

from from

re re

support support

under under

an an 333 333

the the

Restatement Restatement

Haw. Haw.

!n !n

641 641

to to

power power

descendants descendants

Taz Taz

forces forces

In In

31 31

year year

was was

such such

illus illus

to to

sell sell

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Bank Bank

Staley Staley

are are

Petition Petition

Trust Trust

settlor's settlor's

Trusts Trusts

sufficient sufficient

b, b,

request request

P.2d P.2d

all all

also also

the the

his his [o [o

benefit benefit

(1957).

A.2d A.2d such such

Justifying Justifying

York: York:

and and

Hampshire: Hampshire:

or or

(1967); (1967);

Beneficiaries, Beneficiaries,

in in

of of

per per

this this

generally generally

see see

Restatement Restatement

criticism criticism

to to

December December

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for for

Deviation Deviation

the the

professional professional

had had

179 179

See See

892 892

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cmt. cmt.

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267 267

~Hawaii: ~Hawaii:

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Other Other

As As

See See

New New

29 29 New New

Illinois: Illinois:

England: England:

For For

2856 2856 But But

30 See See

Trust Trust

66 66

was was

notwithstanding notwithstanding

permzt permzt

principal principal

TERMINATION TERMINATION

Haskell, Haskell, have have

Note, Note,

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National National Thus, Thus,

after after

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or or

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intent intent $750 $750

9 9

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886, 886,

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was

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321

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-1981

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one

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1986). created

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deductiop

setflor setflor

authonced

and and

wst wst

(pre

author-

and and

1989),

all all

TRUSTS

[rust [rust

was was

App. App.

go go

13 13

of of

a a

without without

the the

time time

gains gains

beneficiary

out out

vivos vivos

1989) 1989)

B).

more more

(1866).

1985).

have have

ON ON

distribution distribution

(La. (La. beneficiaries marital marital

sisters, sisters, purposes, purposes,

the the

modifications

beneficiaries,

that that

benefit benefit

bounty).

(Conn. (Conn.

(providing (providing would would

arrived arrived

Ct. Ct.

(payment (payment

Matter Matter

occur occur

or or

At At

for for impliedly impliedly

535 535

inter inter carry carry

created created

capital capital

two two

1292 1292

Trust Trust

(Ga. (Ga.

purpose purpose

made made

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1993). provide).

1323 1323

impairment impairment

will will

courts courts

may may

his his

2d 2d other other

any any 2000) 2000)

v. v.

one one

direct direct

1985) 1985)

192 192

W.R. W.R. issue. issue.

(1959).

(Sun. (Sun.

particular particular death, death, so so

setdor's setdor's

for for

1819): 1819):

ASCHER ASCHER

not not of of

IRS IRS

6 6

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So. So.

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14 14

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A.2d A.2d App. App.

and and

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of of

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1931 1931

795 795

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App. App.

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to to

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irrevocable irrevocable

Congress Congress

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the the

483 483

S.E.2d S.E.2d

of of

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1884).

that that

illus. illus.

eliminating eliminating

563 563

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home home

liable liable

AND AND

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an an

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upon upon

272 272

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& &

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object object

prevented prevented

expressly expressly

Aynsworth Aynsworth death death

marital marital

be be

number number

327 327

e e

Later, Later,

100 100

principal principal (2003).

held held

that that

death. death.

principal principal

(Minn. (Minn.

Trust, Trust, L974), L974),

was was

Arbuckle, Arbuckle,

530 530

thereof, thereof,

b b

or or

N.Y.S.2d N.Y.S.2d

142 142

A A

or or

and, and,

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for for

A.2d A.2d

authorize authorize

than than

(Mich. (Mich.

Coffin, Coffin,

1981), 1981),

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or or

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support support

Il Il

`~ `~

Ch. Ch.

cmt. cmt.

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650 650

would would

SCOTT SCOTT

expense expense

v. v.

life life

to to did did

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546 546

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cmt. cmt.

assets. assets.

(1805); (1805);

349 349

one one

Vivos Vivos

754 754 purchase purchase P.2d P.2d

2178 2178

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principal principal

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termination termination

Haskins, Haskins,

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168 168

4 4

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for for

testator's testator's

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66 66

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604 604

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473 473

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left left

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43 43

Trust Trust

terms terms

Inter Inter

for for

wstee wstee

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N.W. N.W.

qualifying qualifying

invasion invasion

income income

430 430

N.W.2d N.W.2d (1807); (1807);

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Co., Co.,

4 4

trust, trust,

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Ves. Ves.

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C.3d C.3d

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Bank Bank

Offerman, Offerman, C.3d C.3d

202 202

Trusts Trusts was was

consented.

360 360

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were were

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It It

B; B;

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Abadie Abadie Trust Trust

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example, example,

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v. v.

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Trust Trust

14 14

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For For of of

Kebble, Kebble,

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19 19

Sazlin Sazlin

6 6 (Third) (Third)

believed believed

66 66

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disposition disposition

income income

Merlin Merlin

income income

was was

terms terms

(Second) (Second)

will, will,

invading invading

18361.

Conn. Conn.

maximum maximum

the the

important important

terms terms

of of

terms terms

sisters sisters

re re

entire entire

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purse purse

Knox Knox

Burlow, Burlow,

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number number

Matter Matter

residue residue

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ht ht

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Whittingham Whittingham

Ynrk: Ynrk:

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payment payment

Restatement Restatement

136 136

arise arise

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Errat Errat

have have

terms terms

Re,tatement Re,tatement

under under

Mathey Mathey

Danko Danko

income income

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When When

Connecticut: Connecticut:

Michigmi: Michigmi:

provided provided (Trust (Trust

See See crust, crust,

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or or

In In

Sre Sre

Soiuh Soiuh

New New

A~lin~ie.~•nta: A~lin~ie.~•nta:

Georgia: Georgia:

I.o~eisiunu: I.o~eisiunu:

District District

Z6 Z6

See See

England: England:

Neer Neer

'-`~ '-`~

the the

Paige Paige

might might

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principal principal

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invasion.

annuities annuities

33.4 33.4

zduca[ion zduca[ion

unlimited; unlimited;

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trust trust

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6 6

(1807): (1807):

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stantially stantially

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tax

116

but

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1976)

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33.4

settlor

claims,

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estate estate

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2002). primary

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24, 24, (applying

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changes

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l) l)

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continues

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split

Nat'1 Nat'1 to to

end end

Whelan, Whelan,

and and

rise rise

an an

was was

would would

a a

199 199

increase increase

[he [he

June June

purpose purpose

1984) 1984)

of of

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those those to to

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to to

trust trust

payable payable

annuity annuity

gift, gift,

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ordered ordered

S.D.N.Y. S.D.N.Y.

settlor's settlor's App. App.

Ct., Ct.,

or or

Merch. Merch.

intent intent

longer longer

a a

the the

provided provided

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Will Will

of of

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case case

interpreted interpreted

over over

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1979).

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to to

primary primary

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no no

regulatory, regulatory,

in in

7 7

continuing continuing

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amount amount

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(E. (E.

Ct. Ct.

view view

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Super. Super. income, income,

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1968) 1968)

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in in

England England

settlor's settlor's

economic economic Under Under

needy needy

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in in

possibility possibility

amendments amendments

434 434

336 336

when when

inflation inflation

1923) 1923)

structuring structuring

good good

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testator testator

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N.W.2d N.W.2d

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claims, claims,

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as as

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increase increase

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federal federal

uniorust uniorust

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W.2d W.2d

Ct. Ct.

the the

instrument, instrument,

an an

1943). to to

with with

on on

unusual unusual

S. S.

981 981

See See

357 357

are are

for for

or or

2d 2d

including including 360 360

trust trust

specified specified

1932; 1932;

annuities annuities

(2003).

often often

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Trusteeship Trusteeship

808 808

75-2456 75-2456

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paid paid

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particularly particularly

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S.W.2d S.W.2d the the

573 573

into into event event

No. No.

various various

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increase.

time.

2181

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540 540

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949 949

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424 424

beneficiaries, beneficiaries,

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421 421

237 237

annuitant's annuitant's take take

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beneficiary. beneficiary.

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all all

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A.2d A.2d

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concluded concluded

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to to

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creating creating

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1973); 1973);

interest interest

have have

of of

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in in

Holmquist Holmquist

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of of

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Trusts Trusts

198 198

33 33

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MODIFICATION

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when when

v. v.

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permitted permitted

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1973). 1973).

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purpose purpose

(Third) (Third) 390 390

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with with

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Application Application

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1 1

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Restatement Restatement

see see see see

294 294 requirements requirements the the

Likewise, Likewise,

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Seven Seven

Arkansas: Arkansas:

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Wisconsin: Wisconsin:

Missouri: Missouri:

New New

I[ I[

J6 J6 Rhode Rhode

37 37 See See

But But But But

all all

circumstances. circumstances. $2500 $2500

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beneficiary beneficiary

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statute).

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purpose purpose

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32 32

their their

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with with

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852 852

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1950) 1950) pay pay

1996).

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473 473

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§ § for for TRUSTS TERMINATION AND MODIFICATION § 33.4 § 33.4 SCOTT AND ASCHER ON of the beneficiary is not sufficiently provided for, regardless of whether the Of course, there continue to be many situations in which the courts beneficiary is entitled to principal, if it is otherwise impossible to carry out refuse to modify the dispositive terms of a trust.38 the settlor's original purpose4 1 Perhaps even more important than the courts' own willingness on Other jurisdictions have statutes of considerably wider scope. These certain occasions to vary the diapositive provisions of amulti-beneficiary under statutes often go well beyond varying the terms of a trust to provide for a trust is the fact that there are now in many jurisdictions statutes that, beneficiary in need. In England, since 1925, trustees have had, under the certain circumstances, expressly authorize the courts to do so. Several of fund when Trustee Act,42 the discretion to make advancements from principal, these statutes pernut the court to hasten the enjoyment of a trust that if a although the beneficiary's interest is contingent or subject to divestment a beneficiary is in need. A New York statute, for example, provides or diminution. In addition, since 1958, the Variation of Trusts Act43 has beneficiary for whom a trust is accumulating income becomes destitute, beneficiary's authorized the court,on behalf of beneficiaries who are under an incapacity, the court may direct the invasion of a suitable sum for the support or education.~'9 In other states there are similar provisions,49 some Another 41 N.Y. Est. Powers &Trusts Law § 7-1.6(b). See Matter of Block, 331 N.Y.S.2d l l7 of which apply, however, only when the beneficiary is a minor. {Burr. Ct. 1972)(life beneficiary entitled to remainder because gift over failed); Matter of York statute authorizes the court, in its discretion, to make an New Kerber, 336 N.Y.S.2d 400 (Burr. Ct. 197?)(oust for education of great-grandson who had beneficiary to whom, or for whose allowance from principal for any disability that would prevent him from attending college, at least without special training; or education benefit, the trustee must pay or apply income, if the support held, trustee should use wst to provide such special training); Matter of Mazufioti, 362 N.Y,S.2d 807 (Burt. Ct. 1974)(income beneficiary was to receive principal at later ages); Matter of Smallen, 385 N.Y.S.2d 257 (Burr. Ct. 1976)(cleaz intent to limit wife to elective increase in the annuity shoe); Matter of Heidelberg, 386 N.Y.S.2d 557 (Burr. Ct. 1976)(educational expenses); certain precisely quantified tax benefits. Indeed, any subsequent purposes. See LR.C. Estate of Heyman, 346 N.Y.S.2d 602(Sun. Ct. 1973)(statute does not apply when char- or unitrust amount might well disqualify trust for federal tax Taxation of Estates, itable corporation has vested remainder); Matter of Miller, 421 N.Y.S.2d 981 (Burr. Ct. y~' 664(d)(1)(B),(2)(B); Ferguson. Freeland &Ascher, Federal Income Taxation of Chari- 1979)(statute does not apply to annuities); Matter of Estate of Brass, 636 N.Y.S.2d 987 Trusts, & Beneticiacies § l 1.02[A](3d ed. 1998); Schmolka, /ncome Astigmatism, 40 Tax L. (Burr. Ct. 1995)(statute authorizes invasion of principal for support and comfort of income table Renuiinder Trusts and Decede~its' Estates: Sixty-Six Years of beneficiary when trust income is insufficient, notwithstanding objection of remainder Rev. l (198x). Beneficiaries, beneficiary); Matter of Rosoff, 653 N.Y.S.2d 227 (Burr. Ct. 1996)(under stuwte, consent Sre ~enerull~• Frolick, Adjustment for Inflation far Fixed-Income Trust of unborn contingent remainder beneficiary is unnecessary). 5~F Notre Dame Luw. 661 (1979). (denying This provision of the New York statute applies only to trusts created on or after June 1, 3"Neer Yurk: Matter of Estate of Campbell,655 N.Y.S.2d 913 (Burr. Ct. 1997) lifetime 1966. As to older vests, invasion is permissible only to the extent the income beneficiary is reformation to eliminate charitable bequests testator allegedly "replaced" with ultimately entitled to principal or if all of the other beneficiaries consent and are adult and charitable remainder ousts). competent. See N.Y. Est. Powers &Trusts Act § 7-1.6(a); Hoelzer v. Blum,462 N.Y.S.2d Ohio: Fifth Third Bank v. Simpson, 730 N.E.2d ~t06 (Ohio App. 1999). 684(App. Div. 1983)(trust for disabled daughter; held, because testator died before June 1, l~'iscrnisin: Matter of Estate of Cayo, 342 N.W.2d 785 (Wis. App. 1983). (Third) of 1966, statute did not authorize invasion for daughter's nursing home care See Restatement (Second) of Trusts g 167(1) & cmt. a (1959): Restatement without authority remainder beneficiazy's consent); In re Will of Ceribelli, 554 (App. Trusts § 66, Reporter's Notes on cmt. a (2003)("the distinct weight of what case N.Y.S.2d l30 Div. administrativr 1990); Matter of Rotermund, 305 N.Y.S.2d 413 (Burr. Ct. there i~ [in~licates~ that the rule of 'eyuitable deviation' applies only [o 1969) (although income beneficiary had general power of appointment); Mater of Harold, pro~~isions")(emphasis in original). 386 N.Y.S.2d 972 (Burr. Ct. 1976). 'y N.Y. Est. Powers &Trusts Law g 9-2.2. See Matter of Wagner, 80 N.Y.S. 785 (App. beneficiaries' 'Z 15 Geo. V, c. 19, § 32. See In re Craven's Estate, [1937] Div. 1903): Mutter of Davis, 2U2 N.Y.S.2d 106 (Sup. Ct. 1960)(although Ch. 431 (statute permits deviation only when it is for benefit of whole trust, interests were contingent on reaching majority). not just one beneficiary); /n re Leng, [1938] Ch. 821; In re Beckett's Settlement, [1940] ~0 Cnlifonuct: Civ. Code § 726. Ch. 279; In re Moxon's Will Trusts, [1958] 1 W.L.R. 165, [1958] 1 louisiai~u: Rev. Stat. Ann. § 9:1893. All E.R. 386 (Ch.); In re Collard's Will Trusts, [1961] Ch. 293,[1961] t All N/innesotu: S[at. § SW.17. E.R. 821. 436 & 7 Eliz. II, c. 53. See Knocker North Dakota: Cent. Code § 47-03-06. v. Youle,[L986] 1 W.L.R. 934,[1986] 2 All F.R. 914(Ch.) (refusing to vary trust without Wisconsin: Stat. p 701.13. See Matter of Ralph Holmquist Trust, 357 N.W.2d 7 (Wis. consent of adult takers in default of appointment); $300 Goulding v. James,[ 1997] 2 All E.R.239 (C.A. 1996)(lower court erred in refusing to vary 1984)(applying statute in case of beneFiciuy whose income interest was limited to ayst on grounds that variation was convary to testator's intentions). per month).

2182 »^^ 2183

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would would

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Report Report

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than than

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trust trust

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132 132

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breadth breadth

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interests interests

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28-73-412 28-73-412

(UTC).

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trust.").

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rules rules

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MODIFICATION MODIFICATION

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if if

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as as

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circumstances, circumstances,

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impair impair

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45 45

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wasteful wasteful

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TERMINATION TERMINATION

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of of

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TRUSTS 252 252

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R.S.N.B. R.S.N.B.

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who who

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1984) 1984)

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ON ON

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deceased deceased

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1; 1;

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minor, minor,

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18 18

benefit benefit

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W.W.R. W.W.R.

of of

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D.L.R.3d D.L.R.3d

outweighs outweighs

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33 33

161, 161,

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36 36

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beneficiaries beneficiaries

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519, 519,

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ASCHER ASCHER

last last

96, 96,

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increase increase

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that, that,

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Finnell Finnell Trusts, Trusts,

R. R.

738 738

to to

and and

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1973); 1973);

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benefit benefit

[1986] [1986]

Sask. Sask.

to to

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N.Z.L.R. N.Z.L.R.

Vnriation Vnriation

and and

that that

terms terms

and and

of of

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I I

AND AND

1958, 1958,

variation variation

benefici:u

37 37

Trusts Trusts

variation variation

Trustee Trustee

Trust Trust

(1985); (1985);

Sask. Sask.

Dickson Dickson

235 235

the the

Proposal Proposal

2: 2:

263, 263,

C.A. C.A.

Sask. Sask.

the the

f'rwn f'rwn

the the testamentary testamentary

R.S.O. R.S.O.

pemut pemut

of of

W. W.

would would

than than

Law Law

45 45

investments investments

interest, interest,

1, 1,

of of

A A

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distributions distributions

v. v. SCOTT SCOTT

1~ 1~

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be be

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§ §

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had had

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Sask. Sask.

or or

1936, 1936,

1956, 1956,

does does

413, 413,

any any

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Departgre Departgre

of of

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602 602

c. c.

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2184 2184

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powers. powers.

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50 50

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1981) 1981)

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interests interests

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206 206

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280 280

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397 397

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554 554

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§ § (varying (varying ;tances, ;tances, :hanbes, :hanbes, PROOF OF SERVICE

2 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES

At the time of service, I was over 18 years of age and not a party to this action. I am employed in the County of Los Angeles, State of California. My business address is 2121 Avenue 4 of the Stars, Suite 2400, Los Angeles, CA 90067.

On Apri14, 2014, I served true copies of the following documents) described as OBJECTORS'/RESPONDENTS' TRIAL BRIEF on the interested parties in this action as 6 follows:

7 SEE ATTACHED SERVICE LIST

8 BY MAIL: I enclosed the documents) in a sealed envelope or package addressed to the persons at the addresses listed in the Service List and placed the envelope for collection and 9 mailing, following our ordinary business practices. I am readily familiar with Browne George Ross LLP's practice for collecting and processing correspondence for mailing. On the same day 10 that the correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage filly prepaid. 11 I declare under penalty of perjury under the laws of the State of California that the 12 foregoing is true and correct.

13 Executed on Apri14, 2014, at Los Angeles, California.

14 ~_~ `_ 15 ~~~ ~~ ~_ Claudia Bonilla 16

28 1 SERVICE LIST

2 In re the Matter ofthe L.L. Nunn Trustfor the benefit ofDeep Springs College under the Deed of Trust dated November 5, 1923 3 INYO SUPERIOR COURT, Case No. SICVPB 12-53232 4 Joseph C. Liburt Co-Counsel to Kinch Hoekstra and Edward 5 ORRICK,HERRINGTON Keonjian & SUTCLIFFE LLP 6 1000 Marsh Road Menlo Park, CA 94025 7 Tel: (650) 614-7400 /Fax: (650)614-7401 jliburt~c~orric~k.com 8 Heather M. Hoekstra, Esq. 9 420 Coventry Road Kensington, CA 94704 10 Tel.(510) 525-1514 heather.miya(~?,~mail.com

BAKER MANOCK & JENSEN,PC Counsel for David Hitz 12 I Christopher L. Campbell, SBN 116329 Jeffrey A. Jaech, SBN 076876 13 Dirk B. Paloutzian, SBN 173676 Amber M. Bridges 14 5260 North Palm Avenue, Suite 421 Fresno, CA 93704 15 Tel.(559) 432-5400 /Fax (559)432-5620 CCampbell~a~bakermanock.com 16 DPaloutziann.bakerinanock.com ABridges~~r~,bakermanock.com 17 JJaech(a)bakermanock.com 18 LAW OFFICES OF PETER E. TRACY Peter Tracy, SBN 78185 19 106 South Main Street, Suite 200 P. O. Box 485 20 Bishop, CA 93515 s~2-z9~1 21 Tel. ~~60> s~2-1 lol i FaX ~~60~ invomono(a,stanfordalumni.or~ 22 Jon Michaelson Counsel for Deep Springs College Corporation K & L GATES, LLP 23 630 Hansen Way CA 94304 24 Palo Alto, Jon.Michaelson a,kl~ates.com 25

28 1 Ms. Tania M. Ibanez Attorney General Supervising Deputy Attorney General 2 Charitable Trusts Section California Attorney General's Office 3 300 S. Spring Street, Suite 1702 Los Angeles, CA 90013 4 tarsi a.ibanezn,doi . ca. Gov