219 P. 618 | Or. | 1924
Lead Opinion
This is a suit for an account and to recover certain devised trust property. Plaintiffs, with the exception of the E. Henry Wemme Company, are the next of kin and sole heirs at law of E. Henry Wemme, who died testate at Portland, Oregon, on December 17, 1914. The E. Henry Wemme Company is a corporation and is the sole residuary legatee of the testator. The property devised in trust consisted of three tracts of land in Portland, Oregon, of the value of $350,000. The provisions of the will relating to the trust are in these words:
“I give, devise and bequeath unto H. A. Weis, Jessie M. Carson and J. J. Cole and their successors, Lots one (1), Four (4), Five (5) and Eight (8) in Block Fifty-three (53) in Couch’s Addition to the City of Portland, and also Lots One (1) and Four (4) and the south Twenty (20) feet of Lot Five (5) in Block Nine (9) of Couch’s Addition to the City of Portland, and the South One Hundred Twenty (120) feet of Block Seventy-two (72) in East Portland, now a part of Portland, and all now being in the City of Portland, Multnomah County, State of Oregon, to be held in trust, however, by said H. A. Weis, Jessie M. Carson and J. J. Cole and their successors for the uses and purposes hereinafter set forth as follows: Said trustees and their successors shall have power and authority to hold, manage, improve, repair or lease said property or any part thereof without any other authorization than that hereby given, and shall collect all rents, issues and profits arising from said property, and shall from such rents, issues and profits, first pay all taxes, assessments and charges*184 o.f whatsoever kind or nature lawfully made against said property, or any part thereof.
“My said trustees shall immediately after my death cause to be formed a corporation under the name of ‘E. Henry Wemme Endowment Fund’ under and by virtue of the laws of the State of Oregon, providing that the duration of said corporation shall be perpetual, that its principal office and place of business shall be in the City of Portland, County of Multnomah and State of Oregon, with a capital stock to be determined by my trustees, not to exceed, however, the reasonable value of the property herein-before devised to my trustees at the time of such incorporation, and incorporated for the purpose of buying, owning, holding, managing, improving, mortgaging and leasing the real property hereinbefore devised to my trustees, and for the purpose of conducting a maternity home or lying-in hospital for unfortunate or wayward girls in the City of Portland, Multnomah County and State of Oregon.
“My said trustees shall jointly subscribe for all of the capital stock of said corporation, and shall thereupon complete the organization and cause such action to be taken by it that it shall purchase of my said trustees all of said property hereinbefore devised to my trustees, and in payment therefor, issue its capital stock to my said trustees, jointly, and thereupon said trustees shall by good and sufficient conveyance or conveyances grant, bargain, sell and convey to said E. Henry Wemme Endowment, a corporation, all of the real property hereinbefore devised to said trustees, and thereupon the capital stock of said corporation of E. Henry Wemme Endowment Fund shall be issued to said trustees jointly in one certificate which capital stock witnessed by said certificate shall be held in trust by said trustees and disposed of by them as hereinafter directed.
“Immediately upon the completion of the organization of said E. Henry Wemme Endowment Fund, and the transfer to said corporation last mentioned of the property herein devised to my trustees, then and*185 thereupon said corporation shall have the right to borrow a sum of money not to exceed Seventy-five Thousand and No/00 ($75,000.00) Dollars, upon the promissory note of said corporation, and to secure the payment of such promissory note by mortgage executed by it covering Lots One (1) and Four (4) and the South Twenty (20) feet of Lot Five (5) in Block Nine (9) of Couch’s Addition to the City of Portland, in Multnomah County, State of Oregon, said promissory note and mortgage shall contain such provisions and conditions as may be determined and agreed upon by said corporation and the person, firm or corporation from whom it may secure such loan.
“After securing money on the mortgage herein-before provided to be executed by it the said E. Henry Wemme Endowment Fund shall proceed to purchase suitable real estate as a site for a maternity home for unfortunate and wayward girls, and shall construct thereon a suitable home for the reception, accommodation, care, treatment and comfort of unfortunate and wayward girls who may be in need thereof, and shall furnish, equip and maintain such maternity home without cost or charge to the inmates thereof, but shall use the rents, issues and profits arising and issuing out of the property owned by said E. Henry Wemme Endowment Fund, in maintaining, furnishing and equipping said maternity home, and in caring for and providing for the inmates thereof, making a provision, however, should the said corporation deem it necessary, for a sinking fund from such rents, issues and profits, to pay out thereof, when it shall have become due said note given by the corporation as hereinbefore provided. Said maternity home shall be known as The White Shield of Portland, Oregon, and the inmates shall be admitted thereto irrespective of religion or nationality.
“Said corporation by and through my said trustees who shall constitute the Board of Directors thereof, shall after the construction of said home open and*186 thereafter conduct the same for the accommodation, care and keeping of unfortunate and wayward girls as a lying-in hospital without charge therefor.
“In case of the death, resignation or permanent inability of any or either of my said trustees to act as such trustee or trustees, then and in that event the successor or successors of my trustees shall have the right and shall name and appoint the successor or successors of my trustees who may die, resign or be permanently disabled from the performance of the duties as my trustee hereunder, and such successor shall have the right in the same way to appoint their successors and so it shall continue, and a majority of the trustees shall have the right to exercise full power and authority under and by virtue of the provisions of this my last will and testament.
“Upon the expiration of three years from and after my death I direct that my trustees transfer to the different churches of the Church of Christ Science of Portland, Oregon, authorized and chartered by the head Church of Christ Science known as the Mother Church of Boston, Massachusetts, all of the capital stock of said E. Henry Wemme Endowment Fund, in equal parts, to be theirs forever, for their own respective uses and benefit and without any charge or trust reserved to my estate of whatsoever kind or nature, and thereupon my trustees and their successors shall be considered as having completed their duties hereunder and discharged.
“I hope, however, this is not directory, but merely a suggestion that the maternity home constructed as hereinbefore provided shall be continued by said corporation, E. Henry Wemme Endowment Fund, perpetually and forever, but I do not make this binding upon said Church of Christ, Science,. or upon said E. Henry Wemme Endowment Fund, a corporation, for the reason that I have implicit faith and confidence in the Church of Christ Science, and believe that they will be perpetual and I realize the inability of one now living to determine what in the future might be the greatest need and benefit to suffering*187 humanity, and therefore I have given absolutely and without reservation all of the stock of said corporation of said E. Henry Wemme Endowment Fund, to said Church of Christ Science believing that they will expend the rents, issues and profits and all the proceeds of the said E. Henry Wemme Endowment Fund in a manner so as to create the greatest relief for the greatest number of suffering humanity.”
After the death of the testator the trustees, pursuant to his direction, incorporated the E. Henry Wemme Endowment Fund and conveyed said devised property to said corporation. As directed by the will the articles of incorporation provided for the corporation to have capital stock, which stock was issued in the name of the three trustees, in one certificate. The corporation then borrowed the sum of $75,000 upon its note and mortgage, purchased a site in the City of Portland suitable for a maternity home or lying-in hospital, erected the necessary buildings thereon, furnished and equipped the same and received and admitted into said maternity home and lying-in hospital those persons requiring the need of such an institution who came within the class designated by the testator in his will, and furnished to them, free of charge, the services provided for by the testator.
Three years after his death the trustees transferred in equal shares, to the defendant churches, the capital stock of the E. Henry Wemme Endowment Fund, and thereupon the defendant churches each elected one of its own members as a director and continued to operate said maternity home and lying-in hospital for several months thereafter. The churches then caused said maternity home and lying-in hospital to be closed and thereafter refused to admit any of the class of persons designated by the testator into said
Thereupon the plaintiffs brought suit to recover the devised property from the defendant churches, contending that the trust was so indefinite and uncertain that it rendered the devise void, and that because thereof the title to the devised property had not passed from the heirs or the residuary legatee .of the devisor. They also contended that if the trust was sufficiently definite and certain to make the devise good, the defendant churches had breached the trust by their sale of the maternity home and refusal to conduct the particular charity provided for by the testator, and that because thereof the property had reverted either to the heirs at law or to the residuary legatee.
By order of the court the attorney general of the state was made a party defendant. He appeared and by leave of the court filed an answer in the nature of a cross-complaint. In substance he alleged that the testator intended, by his will, to create a charitable corporation, and to that end had devised his real property in trust. He alleged that the churches had breached the trust and prayed that the trust be enforced, and that because of their alleged breach of the trust, the churches be removed as trustees and that new trustees be appointed to administer the trust according to the directions of the testator.
In substance the defendant churches alleged that the testator intended, by his will, to make an absolute and unconditional gift to the churches, not only of
They also allege, in effect, that in order for them to conduct a maternity home and lying-in hospital in accordance with the laws of this state, it will be necessary for them to provide medical services for the inmates thereof, which, under the doctrines and teachings of their church, are prohibited, and that for them to operate an institution of that character and comply with the law would require them to act contrary to the religious convictions and beliefs of their members.
They also allege that although the churches are under no legal obligation to use the devised property for any trust purpose, yet the churches consider themselves under a moral obligation to carry out the wishes of the testator so far as it can be done under the teachings and doctrines of their church, and that the churches have, therefore, purchased a tract of land in Clackamas County, Oregon, upon which they propose to erect buildings for use by paid practitioners of their own religious belief in healing persons having faith in the efficacy of Christian Science treatment, and they allege that the institution they intend to found will be a charitable one and that its maintenance and support will, to. all intents and purposes, conform to the directions of the testator, even if it should be held that the defendant churches have not acquired the full, complete and absolute ownership of the trust property.
The prayer of the churches is that the court decree that the defendant churches are the absolute owners of the corporate property of the E. Henry Wemme Endowment Fund, that the churches hold the same free of all trust obligations, and that their accountability for the management of said property is only that which said churches owe to their own members.
At the conclusion of the trial a decree was entered in the Circuit Court dismissing plaintiff’s complaint and the cross-bill of the attorney general, and decreeing that each of the six defendant churches is the absolute owner of one-sixth of the corporate stock of the E. Henry Wemme Endowment Fund, and through such ownership is the absolute, equitable owner of all of the assets and property of said corporation, and that neither the E. Henry Wemme Endowment Fund, as a corporation, nor the defendant churches, by reason of their ownership of the stock, are subject to any charitable trust or charged with any trust obligation whatsoever. From this decree the plaintiffs and the attorney general have appealed.
The decision of this controversy depends entirely upon the construction to be given to the will, the material part of which has been quoted. In construing a will its whole context must be considered and the court must take the instrument by its four corners and give to it the construction which will effectuate the intention of the testator. The purpose of construing a will is to ascertain the intention of the testator, and this must be gathered from the words
It is obvious from the plain language of the will that the testator intended to be the founder of a public charity. To accomplish that purpose he devised real property of great value in the City of Portland, to three trustees, whom, in express terms, he directed to form and organize, exclusively for charitable purposes, a corporation that would bear his name, and whose duration would be perpetual, and directed them to convey the devised property to said corporation.
Where property is devised for the purpose of creating a private trust, the trustees who are to take and hold the legal title must be definite and certain and the beneficiaries of the trust must be clearly identified or be made capable of identification by the terms of the will; but where, as here, property is devised for charitable purposes, the rule is entirely different.
In the case of a charitable bequest or devise, it' matters not that the trustees are uncertain or in
It is said, that a public charity begins where uncertainty in the recipient begins. It is therefore essential to the creation of a charity that the beneficiaries should be uncertain, for they consist of a class of persons described in some general language, often fluctuating, changing in their individual members and partaking of a quasi-public character: Pennoyer v. Wadhams, 20 Or. 274, 276 (25 Pac. 720, 11 L. R. A. 210); In re John’s Will, 30 Or. 494 (47 Pac. 341, 50 Pac. 226, 36 L. R. A. 242); 2 Perry on Trusts, § 687.
“In order that a trust may be charitable, the gift must be for the benefit of such an indefinite class of persons .that the charity is really a public and not a mere private benefaction.” 3 Pomeroy’s Equity (3 ed.), §1019.
“If lands are given to a corporation for charitable uses, which the donor contemplates to last forever, the heir never can have the land back again; but if it becomes impracticable to execute the charity, another similar charity must be substituted, so long as the corporation exists.” See note by Mr. Justice Story, supra, *16.
The property that the testator intended to donate to the charity is specifically described in the will. There are no words contained in the will by which the property can ever revert to the heirs or to the residuary legatee. The gift was immediate and absolute and vested the title to the property in the trustees as soon as the will took effect. From that moment the property became impressed with the trust and passed beyond the reach of the heirs or
The contention over the ultimate disposal that the devisor intended to make of the devised property arises from the fact that the purposes for which he directed, in express terms, the E. Henry Wemme Endowment Fund to be formed and organized were exclusively charitable, while, at the same time, he directed that it should have and issue capital stock, the par value of which -should be equal to the value of the devised property; that the stock should be accepted by the trustees in payment for the devised property; that it should be held by them in trust for three years after his death and should then be transferred to the defendant churches in equal shares to be theirs forever for their own respective uses and benefits and without any trust or charge reserved to his estate, and accompanied these provisions with these words:
“I hope, however, this is not directory, but merely a suggestion that the maternity home constructed as hereinbefore provided, shall be continued by said corporation, E. Henry Wemme Endowment Fund, perpetually and forever, but I do not make this binding upon said Church of Christ, Science, or- upon said*194 E. Henry Wemme Endowment Fund, a corporation, for the reason that I have implicit faith and confidence in the Church of Christ Science, and believe that they will be perpetual and I realize the inability of one now living to determine what in the future might be the greatest need and benefit to suffering humanity, and therefore I have given absolutely and without reservation all of the stock of said corporation of said E. Henry Wemme Endowment Fund, to said Church of Christ Science believing that they will expend the rents, issues and profits and all the proceeds of the said E. Henry Wemme Endowment Fund in a manner so as to create the greatest relief for the greatest number of suffering humanity.”
The churches contend that the effect of these provisions was to vest in them, three years after the death of the testator, not only the absolute ownership of the stock itself, hut also the real beneficial and equitable ownership of the assets and property of the E. Henry Wemme Endowment Fund, and that as the legal and equitable title is now merged in one ownership, the corporate property of the E. Henry Wemme Endowment Fund is discharged from the trust and relieved of all trust obligations. In other words, they contend that by their acquisition of the stock they have become the sole stockholders of the corporation, and as such they are vested with all of the rights and privileges that a stockholder owning all of the stock would have in a corporation organized for profit. Stated briefly, the right possessed by a stockholder of a corporation organized for profit is the right to be recognized as a stockholder, to share in the making of its by-laws and the election of its board of directors, to receive a pro rata share of the corporate profits, in dividends, when declared, and upon its dissolution to participate pro rata in the
Tbe E. Henry Wemme Endowment Fund is not a corporation organized for profit. It was organized by tbe trustees in conformity to tbe directions of tbe testator wbo prescribed in explicit terms the purposes for wbicb tbe corporation was to be formed and organized. He prescribed that tbe corporation was to be “incorporated for tbe purpose of buying, owning, bolding, managing, improving, mortgaging and leasing tbe real property hereinbefore devised to my trustees, and for tbe purpose of conducting a maternity home or lying-in hospital for unfortunate or wayward girls in tbe City of Portland, Multnomah County and State of Oregon.” These purposes are solely and exclusively charitable and a corporation organized for tbe sole purposes stated by tbe testator is purely an eleemosynary corporation, wbicb, as defined by Sir William Blacks tone, is one “constituted for tbe perpetual distribution of tbe free alms or bounty of tbe founder of them to such persons as be has directed. Of this kind,” be says, “are all hospitals for tbe maintenance of tbe sick, poor and impotent.” 1 Blackstone, *471.
In Carson v. Schulderman, 79 Or. 184 (154 Pac. 903), tbe determination of this identical question as to this particular corporation was presented to this court upon the question of whether tbe trustees should be required to pay tbe fees provided by statute for tbe filing of articles of incorporation of a corporation organized for commercial purposes or tbe fees of one organized for charitable purposes, and it was held that this corporation was organized for charitable purposes and not for profit, notwithstanding that tbe articles of incor
No words can be found in the will which in any way authorize oh empower the corporation to sell or dispose of the devised property or any part thereof, or to use the rents, issues and profits of the devised property for any purpose except to maintain and support a maternity home and lying-in hospital. The purpose for which the testator directed that the corporation should be formed and organized was to dispense the bounty of the testator, the donor of the property, in carrying out the specific objects and purposes expressly stated and declared by him in the will. In fact, it was impossible for the trustees to incorporate any corporation except an eleemosynary one if they complied, as they were bound to do, with the directions contained in the will. The testator specifically enumerated in the will the purposes for which the corporation was to be formed. This enumeration of the powers of the corporation, by necessary implication, excludes the exercise by the corporation of any powers except those enumerated or such as are necessary to carry into effect the powers so enumerated. The will expressly declared that the duration of the corporation shall be perpetual, and conferred no power upon the corporation to use the rents, issues and profits of the devised property for any purpose except for the maintenance and support of the maternity home and to repay the money borrowed to erect and establish the same. All of these purposes were charitable. Under the specific directions of the testator the corporation could not engage in any enterprise or pursuit not charitable. Hence, it could engage in no business or pursuit for gain upon which it could earn a revenue or realize a profit.
“A charitable corporation is not an association of shareholders, like a business corporation or joint-stock company; but is merely an agent or trustee for the administration of trust funds, and the beneficiaries of the trust are the donees of the charity, and not the members of the corporation.” Section 34.
“The distinguishing feature of charitable corporations is, that they are formed for the administration of charitable trusts, and not for the profit of the corporators themselves; for example, corporations formed for the management of free hospitals and asylums for the relief of the poor, insane, blind, or otherwise helpless. * * A charitable corporation is merely a trustee or agent selected by the donor of the charity for the purpose of administering funds given for charitable purposes, and the beneficiaries of this trust are frequently the public, or parties outside of the corporation.” Section 4.
“The right of a majority of shareholders to wind up the company’s business, and distribute its assets, exists only provided the company was formed solely for the benefit of its shareholders. The majority of*198 a charitable corporation, or any corporation formed to administer a trust in favor of third persons, evidently possess no such power.” Section 414, 1 Morawetz on Corporations (2 ed.).
“From their very nature religious, educational, charitable and fraternal and social organizations are neither intended nor authorized to have capital stock. Generally, the necessity and authority for capital stock is limited to corporations that are intended for the financial benefit of the members, while it' is not required or authorized for those not so intended. As shown in a preceding section, the authority to issue capital stock is statutory, and must be plainly conferred.” 4 Thompson on Corporations (2 ed.), Section 3402.
The only cases to which our attention has been called, where a corporation organized for charitable purposes had issued capital stock, are In re Centennial & Memorial Assn., 235 Pa. 206 (83 Atl. 683), and in Donohugh’s Appeal, 86 Pa. 306. In the first case cited, a corporation had been incorporated to purchase, improve and preserve lands occupied by General Washington at Valley Forge, as a memorial park for all time to come. Certificates of stock had been issued to individuals for moneys contributed to aid the corporation in carrying out the purposes for which it had been incorporated. The corporation was dissolved by decree and by a subsequent decree commissioners were appointed to carry out the objects and purposes of the charitable use for which the property of the dissolved corporation had been held in accordance with the trust declared in its charter. Eeferring to these stock certificates, the court said:
“While the certificates issued were called ‘stock,’ they .lacked its essential features, except that the holders were entitled to elect directors, * * . A*199 share of stock is an incorporeal, intangible thing. It is a right to a certain proportion of the capital stock of a corporation never realized except upon the dissolution and winding up of the corporation, with the right to receive, in the meantime, such profits as may be made and declared in the shape of dividends. The so-called stock in this case had none of these attributes. * # On dissolution the property of a charitable association does not revert to the donors, nor may it be divided among the members of the association, but it should be appropriated to the purposes most nearly akin to the intent of the donors under the direction of the court.”
In the latter case the complainant was a corporation organized for charitable purposes that had issued stock. It had been founded by Benjamin Franklin and others to maintain a public library. It sued for an injunction to restrain the tax collector from levying and collecting* a tax on its library and library buildings. Referring to the interests of the stockholders of the corporation, the court said:
“The library is a trust, and while it is the property of the corporation, and therefore in a certain sense of the corporate stockholders, yet it is not their property in any full, legal or commercial sense. They cannot sell it and divide the proceeds among themselves as individuals — that would be a violation of the trust, which a court of equity would be bound at once to restrain.”
A corporation is purely a creature of statute. It can exercise no power unless the statute expressly or by necessary implication authorizes it. Without such statutory power a corporation cannot have or issue capital stock. In this state corporations organized for profit are required by statute to have capital stock in order to enable them to carry out the objects and purposes for which they are organ
The churches contend that the testator intended to confer upon them the power, at will, to discontinue the charity, dissolve the corporation and distribute its assets among themselves. If this is true, it is
In founding this charity the testator knew that it was necessary for the visitorial power to reside in someone. He knew that in the nature of things the three trustees named in the will could exercise the power for a limited time only. It appears that his heirs were, for the most part, residents of Germany,
Had the testator intended to make a gift to the churches of the devised property it would have been wholly unimportant to him whether these churches would exist perpetually or not, and he would have had no reason to express any trust or confidence in them, for he knew that if the property was given to them they would use it for church purposes only. But because of his implicit faith and confidence in them, and of his belief that the churches would exist forever, and therefore be always capable of supervising and controlling the dispensation of the charity he was founding, he selected them as the legal visitors to see that the charity should be administered according to the purposes for which he donated his property.
If the testator had intended to give a beneficial interest in the corporate property instead of conferring a mere visitorial power over the corporation, it is reasonable to suppose that he would not have directed a corporation to be formed or an encumbrance to be placed upon the property or a particular charity to be established or have deferred the consummation of the gift for three years after his death, during which time an expenditure of $75,000 was to be made in establishing a charity which would be just as essential after as before the end of three years, but that he would have made an absolute and immediate gift, vesting the unencumbered title to the property in the churches at once. In fact if the con
In prescribing the terms and conditions under which the corporation should be formed, the powers it should have and exercise, the charitable use it should make of the devised property and the income therefrom, the testator was dealing with his own property, and it was his right to prescribe every condition controlling its disposition and the charitable uses to be made of it. The E. Henry Wemme Endowment Fund was incorporated and organized by legislative authority and the state has granted it the* right of perpetual existence as a corporation. This franchise granted by the state to exist perpetually as a corporation cannot be taken away by the state except for just cause. Much less ought a trustee, charged with the conduct of the charity, be permitted to do so.
“Individuals,” said Mr. Chief Justice Marshall, “have a right to use their own property for purposes of benevolence, either toward the public or toward other individuals. They have a right to exercise this benevolence in such lawful manner as they may choose; and when the government has induced and excited it by contracting to give perpetuity to the stipulated manner of exercising it, to rescind this contract and seize on the property is not law but violence. Whether the state will grant these franchises and under what conditions it will grant them, it decides for itself, but when once granted, the Constitution holds them to be sacred until forfeited for
But notwithstanding these considerations, the churches contend that, by the provisions contained in the last two paragraphs of that part of the will quoted above, in directing the trustees to transfer all of the capital stock of the E. Henry Wemme Endowment Fund to them, accompanied by the declaration of the testator that this stock was to be theirs forever for their own respective uses and benefit, and without any charge or trust reserved to his estate, and by his subsequent declaration that he had given absolutely and without reservation all of the stock of the corporation to the churches, the testator intended to give to the churches the full beneficial equitable title to all of the property of the E. Henry Wemme Endowment Fund and that the precatory words accompanying these declarations were not sufficient in themselves to create a trust upon the property in the hands of the churches, and therefore upon the transfer of the stock, the churches became the absolute owners of all of the property and assets of the corporation, and as the churches are organized for the advancement of religion, their ownership and enjoyment of the property will not divest it of the charitable uses intended by the testator.
At the time the transfer of the stock to the churches was to be made under the will, by its terms the legal title to the devised property was to be vested in the E. Henry Wemme Endowment Fund and the full beneficial ownership of the property was to be vested in the beneficiaries designated in the will. These beneficiaries, by the terms of the will, consisted of those unfortunate and wayward girls who were in
In collectirg the intention of the testator from the words of the will, regard must be had to the nature and character of the property which the testator is attempting to dispose of. It is certain that, in disposing of the stock of the E. Henry Wemme Endowment Fund, the testator knew that by the terms of his will he hid devoted the property of the corporation exclusively to charitable uses and that a transfer of the stock could not in any way affect the uses to which the pioperty of the corporation was devoted. Knowing this as he did, it is idle to contend that in directing the trustees to transfer the stock to the defendant churches he intended in any way to change or affect the charitable uses for which he had devised his property. He also' knew that by the terms of his will he was directing the trustees to provide in the
Knowing these things, he must have known that if the legal title to the property had become vested in the E. Henry Wemme Endowment Fund and that corporation had been incorporated according to his directions, he could neither confer upon his heirs nor any other person, that he might appoint, any power over the corporation or over the charity, except a visitorial power over the corporation to see that those in charge of it administered the charity according to law.
Considering the last two paragraphs of the will and giving proper regard to the nature and character
In order to raise a precatory trust, it is necessary that there be a gift of property to one person for the benefit of another. Precatory words are words of recommendation, entreaty or the like, accompanying a gift and implying a desire or wish on the part of the donor that the property given should be used for the benefit of some designated person or be applied to some designated purpose. Precatory words are not imperative in form as that would result in a contradiction in terms. They are words of recommendation, entreaty or wish, and it is sufficient to make them imperative if it appears that they were intended to create an obligation.
The doctrine of precatory trusts was announced by Lord Langdale in Knight v. Knight, 3 Beav. 148, in these words:
“As a general rule, it has been laid down that when property is given absolutely to any person, and the same person is, by the giver who has power to command, recommended, or entreated, or wished to dispose of that property in favor of another, the*209 recommendation, or entreaty, or wish shall be held to create a trust: 1. If the words are so used that, upon Ihe whole, they ought to be construed as imperative; 2. If the subject of the recommendation or wish be certain; 3. If the objects or persons intended to have the benefit of the recommendation or wish be also certain.”
The third subdivision quoted is not applicable to a charity, because the objects of a charity are always indefinite and uncertain.
In the will here the testator accompanied the gift of the stock by declaring: “I hope, however, this is not directory, but merely a suggestion that the maternity home constructed as hereinbefore provided shall be continued by said corporation, E. Henry Wemme Endowment Fund, perpetually and forever, but I do not make this binding upon said Church of Christ, Science, or upon said E. Henry Wemme Endowment Fund, a corporation, for the reason that I have implicit faith and confidence in the Church of Christ, Science, and believe that they will be perpetual and I realize the inability of one now living to determine what in the future might be the greatest need and benefit to suffering humanity, and therefore I have given absolutely and without reservation all of the stock of said corporation of said E. Henry Wemme Endowment Fund, to said Church of Christ, Science believing that they will expend the rents, issues and profits and all the proceeds of the said E. Henry Wemme Endowment Fund in a manner so as to create the greatest relief for the greatest number of suffering humanity.”
We think that this last paragraph of the will, couched, as it is, in words of recommendation, was intended by the testator to impose an obligation
That the testator did not intend that the objects of the new charity should be the churches themselves is clear because if that had been his intention he would have stated so in apt terms, and that the testator intended that the change should not be made in the immediate future is apparent from his statement that he realized that one now living could not foresee a. change of conditions which might occur in the world’s history, whereby another form of charity would be more beneficial to suffering humanity than the one founded by him.
We think, by the use of these precatory words, the testator intended to impose an absolute liability upon the churches to maintain the maternity home until some time when that form of charity would be less beneficial to humanity than some other form. That that contingency has not yet arisen appears from the fact that the defendant churches make no defense upon that ground, but base their right to make the change wholly upon the fact that they cannot administer the trust in operating the maternity home without violating the religious convictions of the members of their own churches. Clearly, this is not the contingency contemplated by the testator, upon the happening of which the churches were to have the power to change the particular charity for another. But if the contingency had occurred by reason of the objects of the charity founded by the testator failing, we do not
Whether the purposes of the testator in providing for the substitution of some other form of charity, which, at some future age, may be of greater benefit to a greater number of suffering humanity, are void, because so vague and uncertain, or whether morality will ever so universally prevail that it will render this particular form of charity unnecessary, are matters with which we are not now concerned. If those conditions should ever prevail, there are well-established rules by which the charitable uses, for which the testator devised the property, can be executed.
It is no answer for the defendant churches to say that, because the particular charity for which the testator provided is now being conducted and carried on by the Salvation Army upon the site purchased by the trustees for the maternity home, the necessity for the particular charity provided for by the testator no longer exists. The purpose for which the testator devised his property was to have the E. Henry Wemme Endowment Fund carry on this particular charity. The Salvation Army are under no obligations, arising through the will, to conduct and maintain a maternity home, and they may discontinue the same at will.
The defendant churches, believing that the transfer of the stock, pursuant to the provisions of the will, operated to vest in them the title to the property of the corporation as a consummated gift, discontinued the charity which the testator, as donor, intended
It is conceded by the churches that because of the doctrines and teachings of the Church of Christ, Scientist, the churches themselves cannot, without violating the religious convictions and beliefs of their own members, maintain and operate the maternity home according to the laws of this state. That there are unfortunate and wayward girls requiring the aid of such an institution is not disputed. As the objects of the charity have not failed but the trustees themselves have, it is the duty of the court to appoint other trustees to conduct that particular charity and to administer the trust according to the directions of the donor.
It is a well recognized principle of equity that a trust estate must bear the necessary expenses of its administration. The attorneys representing the parties opposed to the defendant churches have performed services for which they are entitled to receive a reasonable compensation. In Trustees v. Greenough, 105 U. S. 527, 532 (26 L. Ed. 1157, see, also, Rose’s U. S. Notes), that court said:
“It is a general principle that a trust estate must bear the expenses of its administration. It is also established by sufficient authority, that where one of many parties having a common interest in a trust fund, at his own expense takes proper proceedings to save it from destruction and to restore it to the. purposes of the trust, he is entitled to reimbursement*213 either out of the fund itself, or hy proportional contribution from those who accept the benefit of his efforts. This has long been the rule in relation to proceedings for restoring property to the uses of a charity, which has been unjustly diverted therefrom. Thus, in Attorney-General v. The Brewers’ Company (1 P. W. 376), Lord Chancellor Cowper allowed costs to the relators out of the improved rents which they received for the charity, 'for that they had been -serviceable to the charity, by easing them of the six hundred and twenty pounds debt which was claimed against them.’ In Attorney-General v. Kerr, (4 Beav. 297), it is conceded to be the general rule that the relator in a charity information, upon obtaining a decree, is entitled to his costs as between solicitor and client. In that case they were not allowed out of the general charity estate, but were charged upon the particular property recovered. The same rule was followed in Attorney-General v. Old South Society, 13 Allen (Mass.), 474.”
For these reasons the decree of the lower court will be reversed and the cause will be remanded to that court with directions to appoint not less than three nor more than five competent and qualified trustees to take over all of the property of the E. Henry Wemme Endowment Fund and to administer the trust and to require the defendant churches to account for all moneys and properties belonging to the E. Henry Wemme Endowment Fund that have come into their hands or possession, and to deliver and pay over the same to said trustees so to be appointed, and to ascertain and determine the reasonable compensation which should be paid to the attorneys representing parties in opposition to said churches for their services performed by them in this suit, and to cause the same to be paid from the trust estate, and for
Reversed and Remanded, With Directions, Rehearing Denied. Motion to Reopen Denied. Motion Re Attorney’s Fees Denied.
Rehearing
Motion to recall mandate denied February 26, 1924.
On Motion to Recall Mandate.
(223 Pac. 250.)
Claiming to be entitled to attorney’s fees out of the trust fund which is the subject of this litigation, W. P. La Roche, an attorney of this court, has applied for an order directing that the mandate heretofore issued herein be recalled and amended or modified so as to authorize the allowance of such attorney’s fees.
After this suit was commenced, it came to the attention of the Attorney General that the funds and property involved in the litigation belonged to a public charity. Thereupon the Attorney General determined to intervene in the suit for the purpose of defeating the private rights asserted therein and in order to protect and preserve the charity in the interest of the public. The Attorney General authorized Mr. La Roche, the claimant herein, to make such
Pursuant to the authority mentioned, Mr. La Roche, as special attorney for the State of Oregon and for and in the name of the Attorney General, filed an answer of intervention in the suit, and in the subsequent proceedings herein, acted in behalf of the Attorney General until a final decree was entered in this court: Wemme et al. v. First Church of Christ, Scientist, ante, p. 179, 219 Pac. 618.
After the decision herein, but before the mandate sought to be recalled and modified was issued, the Attorney General, by written disclaimer, filed in this court, expressly renounced all claim and right to attorney’s fees in the cause or in the further proceedings to be had in connection therewith, and specially waived and disclaimed the allowance of such fees to him.
The decree and mandate of this court contains the following provision:
“ * * no compensation as attorney’s fees shall be allowed, either directly or indirectly, for services performed by the Attorney General or his assistants in this cause.”
In an affidavit accompanying his motion to recall and modify the mandate, Mr. La Roche states that he was duly employed and authorized by the Attorney General to represent the public interests as his attorney in said cause, with the understanding that affiant should look to the trust fund for his compensation for legal services, in the event that the contentions of the Attorney General were sustained by this court. The affidavit further states that all the legal work done and performed in behalf of the Attorney
The intervention of the Attorney General in the suit resulted in the enforcement of the public charity involved therein. That intervention was made and carried to a successful conclusion by Mr. La Boche; the services performed by him were valuable to the charity, and the funds belonging thereto, and they were rendered pursuant to such authority from the Attorney General as in the circumstances that officer was empowered to confer upon Mr. La Boche.
The statutes clearly prohibit compensation to the Attorney General out of the fund, and no authority is found in the rules of equity practice which warrants such an allowance to the Attorney General. While allowances for attorneys’ fees out of the fund in the control of a court of equity are sometimes made directly to the attorneys themselves, the right of such attorneys thereto in every such case is dependent upon the right of their client to such fees: Schmidt v. Oregon Min. Co., 28 Or. 9, 30 (40 Pac. 406, 1014, 52 Am. St. Rep. 759). If the client is not entitled to costs, including attorney’s fees, out of the fund, no allowance can be made directly to the attorney.
The foregoing considerations led to the decree herein, denying attorney’s fees to Mr. La Boche.
In view of the earnest insistence of Mr. La Boche, and counsel representing him upon his motion, we have again examined the statutes and decisions bearing upon the question.
The office of Attorney General in this state is created by statute, and the powers and authority of the incumbent of that office are those conferred upon
However, the statute does provide that —
“He shall be the law officer of the state, and shall have all the power and authority usually appertaining to such office.” Section 2773, Or. L.
The above provision imposes upon the Attorney General the powers and authority incident to that office at common law. Among the duties of the Attorney General at common law was that of enforcing a public charity: State ex rel v. Lord, 28 Or. 498, 527 (43 Pac. 471, 31 L. R. A. 473); Parker v. May, 5 Cush. (Mass.) 336; People v. Miner, 2 Lans. (N. Y.) 397; 6 C. J. 814.
The compensation of the Attorney General is fixed by the statute. The express authority granted the Attorney General to appoint or employ attorneys to assist him in the performance of his duties is confined to the appointment of a first assistant and such other assistants as he shall deem necessary to transact the business of the office, at annual salaries to be fixed in each instance by the Attorney General at the time of making the appointment. The salaries of the Attorney General and the assistants appointed by him are required to be paid out of the state treasury as other state salaries are paid: Chap. 251, Laws 1921.
Another section of the statute declares in effect that the salaries mentioned shall be in lieu of all other salaries, fees, commissions and emoluments now
Numerous cases hold that at common law, the Attorney General had power to give jurisdiction to the courts and to bind himself as a party representing the public in the ordinary way through an unofficial attorney at law, authorized to represent him: 6 C. J. 806; 2 R. C. L. 916; Parker v. May, 5 Cush. (Mass.) 336, 338; In re Creighton, 91 Neb. 654 (136 N. W. 1001, Ann. Cas. 19131), 128); and it is also held that such power is not limited by statutes giving the Attorney General authority to appoint such assistants as the duties of the office may require, whose salaries shall be paid out of the state treasury: Commonwealth v. Boston etc. R. Co., 3 Cush. (Mass.) 25, 48; Commonwealth v. Knapp, 10 Pick. (Mass.) 477 (20 Am. Dec. 534); McQuesten v. Attorney General, 187 Mass. 185, 186 (72 N. E. 962); Attorney General v. North American L. Ins. Co., 91 N. Y. 57, 66 (43 Am. Rep. 648).
None of the cases above cited, except the last, discuss the question of compensation to special counsel designated by the Attorney General to represent him, payable out of a fund in litigation. In the New York case, the right of special counsel to an allowance of attorney’s fees out of the fund was denied.
“Unless authorized by statute, an attorney-general has no authority to appoint special counsel to act generally for him in actions or proceedings in wMch*219 the state is interested, so as to charge the state with the value of their services.” 6 C. J. 806 and cases cited in note 21.
No authority can be found in the decisions of the courts or in any statute which authorizes the Attorney General to employ special counsel and charge a fund in litigation with payment of their services.
“In the absence of specific authority such funds cannot be ordered by the court to be paid for any purpose, except by express authority of the legislature.” People v. Woodbury, 213 N. Y. 51, 59 (106 N. E. 932).
Counsel for Mr. La Boche, in their brief in support of his claim to compensation out of the fund in suit, cite: Currie v. Pye, 17 Ves. 462; Attorney General v. Wallace’s Devisees, 7 B. Mon (Ky.) 611; Attorney General v. Old South Society, 95 Mass. 474.
In each of those cases, except Currie v. Pye, a private individual having a special interest in preserving a public charity, appeared as relator, employed private counsel and carried on the litigation.
Currie v. Pye was a suit commenced by trustees against the heir, for the construction of a will creating a charity. Costs were allowed the heir as between attorney and client. The Lord Chancellor observed, “that it was frequently done in a charity cause: the heir not having made an improper point.”
Attorney General v. Wallace’s Devisees was a suit instituted in the name of the Attorney General by W. H. Cord, as relator, praying to have enforced and executed a charitable devise in the will. On the question of costs, the court said:
“The court should provide for the payment of all costs necessarily incurred by the relator in this proceeding, and also a reasonable compensation for his*220 services, to be paid by tbe trustees out of tbe trust fund.”
Attorney General v. Old South Society was a suit commenced by an information filed by the Attorney General upon the relation of Joseph Ballard, charging that certain funds belonging to a charitable trust were being wholly misapplied and perverted, and praying for relief in equity. In awarding costs, the court said:
“As the intermingling by the defendants of the fund of the charity with other funds has afforded ground for this information, and the information is sustained in part, the costs incurred in support of it, taxed as between counsel and client, are to be paid out of the charity fund.”
In the case of Trustees v. Greenough, 105 U. S. 527 (26 L. Ed. 1157) (Attorney General not party thereto), the court, explaining the phrase, “costs as between solicitor and client,” which has the same meaning as “costs -as between attorney and client” and “costs as between counsel and client,” said:
“Of course, it is well understood that costs as between solicitor and client include all reasonable expenses and counsel fees, and are not like costs as between party and party, confined to the taxed costs allowed by the fee-bill. This difference is pointed out in the case of In re Paschal, 10 Wall. 483, 493 (19 L. Ed. 992).”
In allowing costs, including attorney’s fees, to the-relator, payable out of the fund, the courts in each of the foregoing- cases, followed the leading case of Attorney General v. Kerr, 4 Bev. 297, where the practice in the Court of Chancery of England in such cases was reviewed. In that case, objection was made to the claim of the relator for costs, including solicitor’s fees, out of the funds of the charity. In
“We are all aware of the great abuse which has been practiced in these charity informations for many years past. In some cases, no doubt, they have been productive of considerable good; but in many, they have ended in the entire ruin of the charities they professed to protect. * *
“It appears to me, that the practice of making any such allowance is of very recent origin, and that it is not a matter of course to make it. # *
“Sir John Leach* indeed, seems to have thought, that a relator was to be considered in some sense in the situation of a trustee; and there are several cases in which he allowed the relator his costs as between solicitor and client, and these cases are of themselves sufficient to show that there was no general rule to allow costs, charges, and expenses. # *
“On considering the cases which have occurred, it appears that the relator in a charity information, where there is nothing to impeach the propriety of the suit, and no special circumstances to justify a special order, is, upon obtaining a decree for the charity, entitled to his costs as between solicitor and client # * out of the charity estate.”
The practice of the Court of Chancery in England in granting costs was ably reviewed by the Court of Appeals of New York in the cases of Rose v. Rose Assn., 28 N. Y. 184, and Downing v. Marshall, 37 N. Y. 380. The practice of awarding costs, including solicitor’s fees to the relator out of the fund in cases relating to charitable trusts, probably originated in the notion alluded to in Attorney General v. Kerr, “that a relator was to be considered in some sense in the situation of a trustee,” for at one time it was the rule in such cases that only trustees were entitled to such reasonable counsel fees payable from the fund
The right of the Attorney General to costs, as between party and party, out of a charity fund, is supported by authority (Attorney General v. Ashburnham, 1 Sim. & St. Rep. 394), but diligent search has failed to reveal any adjudicated case, either in England or the United States, holding the Attorney General, or special counsel authorized to appear for him, entitled to attorney’s or solicitor’s fees out of funds belonging to a public charity which was the subject of the litigation.
It is incorrectly stated in Beames on Costs, page 15, that Moggridge v. Thackwell, 7 Ves. 36, is a case concerning a charitable trust, in which costs as between solicitor and client were allowed out of the fund to all the parties, including the Attorney General.
The case, as reported in 7 Ves. 36, came before Lord Chancellor Eldon on rehearing, and he adhered to the decision and decree, including the order for costs, given by Lord Chancellor Thurlaw, his predecessor: 1 Ves. 464.
The reports of the case show that it was a suit commenced by the executors against the legatees in the will, to obtain, a decree construing a provision of the will, whereby the testator had attempted to found a charity. The Attorney General was not a party to the record, and no reference is made to him in the order for costs, which was in these words: “Let all parties have costs out of the estate, and as between attorney and client, since it is a cause between relations.” 1 Ves. 464, 475. *
In view of the large number of cases that have arisen concerning funds belonging to public charities,
The principles governing the decision of the question under consideration were clearly stated by the New York Court of Appeals in Attorney General v. Continental Life Ins. Co., 88 N. Y. 571. A statute of that state, adopted in 1880, made it the duty of the Attorney General, in the case of the insolvency of a life insurance corporation, to obtain the appointment of a receiver and to supervise the liquidation and distribution of the assets in the interest of policyholders and creditors. The Attorney General designated special counsel to act for him, who claimed the right to attorney’s fees out of the fund. Mr. Chief Justice Andrews, speaking for the court, said:
“It is inconsistent with the duty imposed by the act of 1880, that the attorney-general should be placed in the attitude of applying to the court for allowances to Ms own assistants. The State intervenes, as parens patriae, for the protection of the fund, and those beneficially interested, and it is not consistent with its dignity, nor was it, we think, contemplated, that the value of the services of its agents in the execution of this voluntary trust, should be a charge upon the assets of the insolvent corporation. We are not insensible to the consideration that the act of 1880, imposes onerous duties upon the attorney-general, and that adequate assistance may not have been provided to enable him to perform this additional labor. It would be greatly to be regretted if this decision should hamper the action of the attorney-general under this salutary statute. The legislature, however, can afford such relief as may be necessary. But to permit the State to participate in the division of the assets of insolvent corporations in the hands*224 of a receiver, under a claim for discretionary allowances, or to charge the fund for services of special counsel of the State, is, we think, contrary to principle and to the policy of our legislation.”
From the foregoing review of the authorities, it is seen that the right to an allowance such as that asserted upon the motion under consideration has not been recognized in any jurisdiction; and the great array of decisions, in none of which such an allowance was made, though frequent occasion must have arisen for doing so, argues strongly against the policy and propriety of awarding counsel fees out of a fund in court to the Attorney General or his representative in any case. To allow the motion would arbitrarily extend the scope of firmly established rules of equity practice, the utmost limitations of which were long since fixed by authoritative adjudications. We are not inclined to do this, and accordingly the motion is denied. Motion Denied.
