297 Ky. 670 | Ky. Ct. App. | 1944
Affirming in part and reversing in part.
The decision involves the authority of the trustee of a charitable trust to make final disposition of the real estate devised to it under the will of Dr. William F. Pennebaker, who immediately before his death in the year 1922 was the sole survivor of the famous colony commonly known as the Society of Shakers, located at Pleasant Hill, sometimes called Shakertown, Kentucky. The Society was formed in the year 1805 by the execution and recordation of an instrument known as the covenant. Persons could become members of the Society by assenting to the terms of the covenant, which was construed in Gass et al. v. Wilhite et al.,
Since that decision, the marketable value of the property has increased, along with the general enhancement in value of farms; but the income from the property is not sufficient to continue to maintain a home for *673 the beneficiaries of the trust, and in addition, to make repairs necessary to maintain the buildings on the property; consequently, the improvements on the farm have steadily deteriorated for lack of repairs, and it will not be long before the improvements will waste away and all income will cease. In full realization of these facts, the trustee in this suit has petitioned the Court to permit it to sell the property and invest the proceeds in such manner as will permit it to carry out the purposes of the trust. It is suggested that the proceeds might be invested in other securities, or might be used for the purpose of purchasing perpetual scholarships in other educational institutions, whereby the beneficiaries of the trust could receive the education it was originally designed should be afforded them on the property devised to the corporation. The collateral kinsmen of Dr. Pennebaker, who instituted the action in I.H. Pennebaker et al. v. Pennebaker Home for Girls et al., supra, were made parties defendant, as was also the Attorney General of the Commonwealth. The collateral kinsmen reasserted the claims made by them in the former suit. A demurrer to their pleading was sustained by the Court, and we think properly so, under the doctrine of res adjudicata. The Attorney General filed answer disclaiming any interest in the subject matter. The Court approved the plan to sell the property, and authorized (1) the trustee to invest the proceeds in securities, and the income to be used to carry out the purposes of the trust, or (2) scholarships in other educational institutions to be purchased for the benefit of those entitled thereto under the will of Dr. Pennebaker.
In American Law Institute's Restatement of the Law on Trusts, Section 381, Comment E, it is said:
"If a testator devises land for the purpose of maintaining a school or other charitable institution upon the land, and owing to a change of circumstances it becomes impracticable to maintain the institution upon the land, the court may direct or permit the trustee to sell the land and devote the proceeds to the erection and maintenance of the institution on other land, even though the testator in specific words directed that the land should not be sold and that the institution should not be maintained in any other place."
To the same effect is 14 C.J.S., Charities, sec. 48, pp. 504-506 inclusive, and 10 Am. Juris., Sec. 51, pp. *674
620, 621. In Hill v. McGarvey, 19 S.W. 586, 14 Ky. Law Rep. 101, a similar plan to the one herein proposed was approved. In Hogan v. Netherland et al.,
Insofar as it authorizes the trustee to make sale of the property involved, the judgment is affirmed; but, insofar as it purports to authorize the trustee to reinvest the proceeds of the sale in scholarships, or any other particular form of investment, the judgment is reversed, for further proceedings consistent with this opinion.
Affirmed in part; reversed in part.