Opinion
11-P-803
04-09-2012
BANK OF AMERICA, N.A., trustee v. CENTER FOR HUMAN DEVELOPMENT, INC. & others.
NOTICE: Decisions issued by the Appeals Court pursuant to its rule 1:28 are primarily addressed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, rule 1:28 decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28, issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
At issue is whether the Center for Human Development, Inc. (CHD) is entitled to an allocable share of income under the terms of a testamentary trust established by Grace H. Noyes. The Bank of America, N.A. (bank), as trustee, brought a complaint for instruction seeking guidance whether the share of trust income formerly paid to the Child and Family Service of Pioneer Valley, Inc. (CFS) should be paid to CHD, its successor by merger, or to the remaining designated charitable beneficiaries.
On summary judgment, a judge of the Probate and Family Court concluded that as a result of the merger of CFS into CHD, CFS had ceased to exist within the meaning of the governing trust provision. The judge ordered CFS's allocable share of trust income divided equally among the remaining corporate charitable beneficiaries.
We conclude that the judge lacked a sufficient factual basis to resolve whether CFS ceased to exist as a result of the merger with CHD. We vacate the judgment entered and remand to the Probate and Family Court for further proceedings.
CFS traces its beneficial interest under the trust to the Hampden County Children's Aid Association (HCCAA).
Our resolution of this appeal is made more difficult by the lack of adversarial development. CHD is the only party filing a brief in this court. The Young Women's Christian Association of Western Massachusetts (YWCA), the sole party that objected to CHD's succeeding to CFS's share, filed no brief in support of its position or the probate judge's ruling. We also have no understanding of the position, if any, taken by the division of public charities in the Attorney General's office. See G. L. c. 12, § 8 (Attorney General has exclusive statutory authority to 'enforce due application of funds given or appropriated to public charities within the commonwealth and prevent breaches of trust in the administration thereof').
1. Background. The residuary clause of Noyes's will established a trust, the net income of which was to be paid:
'to such of the following[ ] charitable corporations of said Springfield as are in existence at the time of the respective payments, it being my intention that if any of said corporations shall cease to exist, the net income of said trust fund shall be paid . . . in equal shares to those of them which continue to exist.'
Hampden County Children's Aid Association; Shriners'
Hospital for Crippled Children, Springfield Unit;
Springfield Boys' Club; Springfield Girls' Club;
Springfield Home for Friendless Women and Children;
Springfield Branch of the Girl Scouts of America; and
Springfield Young Women's Christian Association.
It appears undisputed that, subsequent to Noyes's death, HCCAA merged with the Family Service Association, became known as the Child and Family Service of Springfield, and later changed its corporate name to CFS. The merger of CFS into CHD prompted the bank to request instruction regarding payment of the share of trust income previously allocable to CFS.
Apparently, no question arose regarding payment of HCCAA's allocable share of trust income to CFS as a result of earlier mergers.
Among all the interested beneficiaries that received notice of the complaint, only the Young Women's Christian Association of Western Massachusetts (YWCA) filed an objection. In arguing that CFS ceased to exist upon merger with CHD, the YWCA pointed to language in the agreement of merger between CHD and CFS providing that upon the merger, 'the separate existence of CFS shall cease.' For its part, CHD argued that notwithstanding that the 'separate existence' of CFS ceased with the merger, its corporate attributes continued to exist postmerger, only in a different guise. In support, CHD pointed to various merger agreement provisions that require CHD to continue CFS programs, maintain CFS employees and some of its directors, and carry CFS's name in identifying programs previously operated by CFS. Based solely on the documents before him, and particularly the trust and the merger agreement provisions, the judge concluded that CFS ceased to exist upon merger with CHD and, in such circumstances, it was the testatrix's intention that the payment of CFS's share of trust income should cease. We conclude that the judge erred.
The agreement also requires that 'CHD shall succeed to and administer the endowment of CFS, consistent with all applicable donor restrictions' and that if CHD 'can no longer accomplish the mission of CFS as set forth in CFS's current mission statement, and that a separate smaller entity could do so, CHD shall create such an entity and shall transfer to that entity the value of funds held at that time from donors to CFS and real estate held at that time [and] previously owned by CFS.'
The judge appears to have erroneously concluded that CFS 'cease[d] to exist' under the will because the merger agreement provided that 'the separate existence of CFS shall cease.' Although the judge's decision references 'programic [sic] and personnel and continuity,' no basis exists in the summary judgment record for determining what, in fact, HCCA/CFS did in furtherance of its charitable purpose, what CHD does in furtherance of the same, and the extent to which the charitable undertakings of the merged entity continue in the surviving corporation.
2. Discussion. We agree that the doctrine of cy pres is inapplicable here. See Pritchard v. Attorney Gen., 77 Mass. App. Ct. 494, 496 (2010). The question is not how to accomplish a charitable purpose that is no longer possible. Indeed, the trust itself provides what happens should a beneficiary cease to exist in the future. Nor is the question purely one of divining the testatrix's intent, as her intent is expressed in the will and susceptible of understanding without resort to extrinsic evidence. See Putnam v. Putnam, 366 Mass. 261, 266-267 (1974).
We do not agree, however, that the question whether 'the corporation has 'cease[d] to exist' is purely one of law. Rather, we view that determination as peculiarly fact dependent and not resolvable without resort to extrinsic evidence. Indeed, whether HCCAA/CFS has 'ceased to exist' as a result of merger with CHD is a determination that will be informed by a variety of facts, including comparison of the charitable purposes and programs of the respective corporations as reasonably adapted by practical considerations and changed circumstances. See First Bank & Trust Co. of Hampden County v. Attorney Gen., 371 Mass. 796, 799-802 (1977).
We vacate the judgment concluding that CFS has ceased to exist within the meaning of the trust and remand for further factual development and ruling in accordance with this memorandum and order.
We express no view as to whether the pertinent charitable corporate beneficiary has ceased to exist. Rather, we remand so that the requisite factual underpinning for that determination can be made clear.
Upon remand, the judge may choose to hear evidence not only from CHD and the objecting party YWCA but from the public charities division of the Attorney General's office. See Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235, 245 (2007) (Attorney General's 'duty to see that the public interests are protected . . . or to decline so to proceed as those interests may require').
So ordered.
By the Court (Grasso, Mills & Trainor, JJ.),