Opinion
2008-2354/D
02-21-2019
APPLICATION OF A. Paul BOGATY TO FURTHER MODIFY A BEQUEST FOR CHARITABLE PURPOSES PURSUANT TO EPTL § 8-1.1 AFFECTING the ESTATE OF Richard RÜHLE, Deceased.
Attorney for Petitioner: Ian W. MacLean, Esq. and Heather M. Barney, Esq., The MacLean Law Firm, P.C., 60 East 42nd Street, 40th Floor, New York, NY 10017, 212-682-1555 Attorney of Respondent: Barbara D. Underwood, New York State Attorney General, By: Lisa Barbieri, Esq., Charities Bureau, 28 Liberty Street, New York, NY 10005, 212-416-8396
Attorney for Petitioner: Ian W. MacLean, Esq. and Heather M. Barney, Esq., The MacLean Law Firm, P.C., 60 East 42nd Street, 40th Floor, New York, NY 10017, 212-682-1555
Attorney of Respondent: Barbara D. Underwood, New York State Attorney General, By: Lisa Barbieri, Esq., Charities Bureau, 28 Liberty Street, New York, NY 10005, 212-416-8396
Peter J. Kelly, S.
For a second time, the court is presented with a petition requesting that it apply its cy pres powers to modify a testamentary charitable bequest set forth in decedent's last will and testament which was executed on March 30, 1999 and admitted to probate in 2008.
Article Fifth of the will directed the executor to establish a not-for-profit corporation as the vehicle to administer funds for a memorial scholarship to be awarded to a male student, of specific German ancestry, enrolled in certain engineering courses of study as offered by Brooklyn Technical High School (hereinafter "BTHS"). The funds distributed by the executor were to be used to defray the costs of "college tuition, room and board and related expenses." The will further directed that a portion of the funds were also to be utilized to erect a memorial plaque bearing decedent's name and a verse on a wall at BTHS.
In February, 2011, the executor applied for cy pres relief from the court, averring that the administration of the scholarship fund through the formation of a not-for-profit corporation, as opposed to a trust, would incur unnecessary costs and that, more importantly, the stringent demographic and academic requirements set forth in the will could not be met.
The court, by decision dated July 7, 2011, found that decedent had expressed a generalized charitable intent and reformed the will to permit the fund to be administered by a trust, and broadened the pool of candidates eligible for assistance to male graduates of German ancestry on either the maternal or paternal side, and adjusted the academic requirements to ensure more clarity.
Despite the foregoing, the court is again faced with a request to further modify the testamentary charitable bequest.
Petitioner alleges that further application of the court's cy pres powers is necessary due to the continued inability to identify qualified male applicants graduating from BTHS who are of German ancestry. Consequently, no awards from the scholarship have been made.
Petitioner requests permission to transfer the funds currently on hand in the scholarship fund to the BTHS Alumni Foundation (the "Alumni Foundation") to be administered by it as a scholarship program named "The Richard J. Rühle Memorial Engineering Scholarship Program," which would benefit current BTHS students enrolled in engineering courses by providing money for internships, extra-curricular programs and college test preparation classes, rather than providing college tuition assistance. In considering the merits of the petition, the court must determine whether the circumstances alleged require further application of the cy pres doctrine.
The cy pres mdoctrine, codified in EPTL 8-1.1, provides that when circumstances make it impossible to carry out the terms of a charitable trust, the trust's terms will be modified to permit the use of the trust property in such manner that, in the judgment of the court, "will most effectively accomplish its general purpose" ( EPTL 8-1.1 [c] ; see generally 12 Warren's Heaton on Surrogate's Court Practice § 209.10 [6] [a] [7th ed.] ).
Before the court will apply the cy pres doctrine, it must initially find that the testator demonstrated a general charitable intent (see Matter of Wilson , 59 NY2d 461, 471-472 [1983] ; Application of Syracuse University , 3 NY2d 665, 668 - 671 [1958] ; Matter of Post, 2 AD3d 1091, 1093 [3d Dept 2003] ; Matter of Coffey , 187 AD2d 929 [4th Dept 1992] ). As stated above, the court previously found that the testator had evidenced a general charitable intent in its decision dated July 7, 2011.
Additionally, the court must find that the particular purpose for which the gift or trust was created has failed or is impractical or impossible to achieve (see Estate of Wilson 59 NY2d at 472 ; Estate of Post , 2 AD3d at 1092-1093 [3d Dept 2003] ; Matter of Othmer, 185 Misc 2d 122, 126 [Sur Ct, Kings County 2000] ; see generally 12 Warren's Heaton on Surrogate's Court Practice § 209.10 [6] [a] [7th ed.] ).
At a hearing held on September 12, 2018, the trustee testified that he has been unable to identify a qualified applicant because the New York City Department of Education has informed him that they are restricted from providing data concerning ethnic ancestry of students. Further, his request to BTHS that an advertisement be posted for the scholarship in the school's college counseling office was declined as violative of the school's policies.
Petitioner now contends that, given the current demographics of BTHS's student body, the court must further modify the present charitable scheme by transferring the funds to the Alumni Foundation. The Foundation would, in turn, utilize the funds to benefit students enrolled in BTHS. This, it is alleged, would satisfy decedent's primary intent of benefitting BTHS.
Based upon the papers submitted and the evidence adduced at the hearing, the court finds that petitioner has satisfied the burden of establishing that the original purpose for which the scholarship fund was created has been impossible or impractical to achieve due to petitioner's inability to identify a qualified candidate. The inability to determine the existence of a beneficiary, however, does not defeat the power of the surrogate's court to prevent failure of the bequest ( EPTL 8-1.1 [d] ).
Accordingly, the court finds that the cy pres doctrine should be applied to further modify the bequest in Article Fifth of decedent's will.
In utilizing cy pres power, "care must be taken to evaluate the precise purpose or direction of the testator, so that when the court directs the trust towards another charitable end, it will ‘give effect insofar as practicable to the full design of the testator as manifested by [the] will" ( Matter of Estate of Wilson, 59 NY2d at 472, quoting Matter of Scott, 8 NY2d 419, 427 [1960] ).
Decedent's last will and testament is far from a typical "form" instrument and his intentions are manifestly expressed. For example, Article First of the will sets forth instructions regarding decedent's casket, personal items to be placed therein, the type and length of music to be played at a memorial ceremony, the type of officiant, and describes the materials and inscription to be placed on a headstone. Article Third makes provisions for a spouse in case of his marriage, insuring only an amount equal to an elective share is awarded. Article Fourth, which covers a page and a half, makes a bequest to his first born male child, if one exists, to the exclusion of any other children. This bequest also contains a plethora of conditions such son would have to satisfy in order to qualify for any distribution. The alternative beneficiaries under both Article Third and Fourth are the National Rifle Association and the "Scholarship Fund." Article Fifth of the instrument establishes the Scholarship Fund. Again, as originally designed, the Scholarship Fund was designed to pay college-related expenses to a male graduate of BTHS who met certain academic criteria and whose lineage was from a specific area of Germany.
Keeping in mind the discretion afforded by the cy pres doctrine and the responsibility to closely effect the terms of decedent's intent, the court finds the petitioner's proposal to transfer the assets in the Scholarship Fund to the Alumni Foundation cannot be granted as it fails to meet several of the essential objectives of decedent's charitable bequest and clearly does not accurately reflect the decedent's charitable intent.
Indisputably decedent never intended to make a bequest of his residuary estate to BTHS, nor did he ever envision administration of the Scholarship Fund be granted to it. He clearly desired, and set forth, that a not-for-profit corporation administer the fund. Those functions are now being performed by a trustee. BTHS's involvement in this testamentary scheme was to be purely ministerial. Indeed, the will provides that scholarship applications would be submitted through BTHS "...which, upon verification of the academic information required shall..." forward same to the executor of the estate. Consequently, BTHS's role was curtailed to a mere verification of the academic requirements of the candidate and notification to the administrator of its findings. BTHS was never given any authority pertaining to the actual selection of a successful candidate nor the ability to distribute funds.
Furthermore, the scholarship funds were specifically to be used to defray the "college tuition, room and board, and related expenses" of the successful candidate enrolled in an "engineering program at an accredited college." The assets of the Scholarship Fund were, therefore, never intended to benefit BTHS or students currently in attendance there, but were to be distributed to the various collegiate institutions in which recipients would be enrolled and pursuing engineering degrees.
To claim decedent's intent would be satisfied by payment of the scholarship funds outright to the Alumni Foundation for a totally different purpose is pure unadulterated fiction. Indeed, the petition and affidavits in support all establish that the decedent had made a separate specific bequest to BTHS of his textbooks and notes for the use of students currently enrolled at the school. Presumably, especially given the detailed nature of all the instrument's other provisions, if decedent primarily intended the Scholarship Fund to benefit BTHS or students currently in attendance there, the will would have so provided. Petitioner is merely seeking to graft other intentions on decedent's bequest which do not comply with its terms (see generally Matter of Syracuse University , 3 NY2d 665, 672 [1958] ).
It is also noted that the modification proposed by petitioner totally eliminates the requirement, as previously modified by the Court, that the recipient be a male student of German ancestry. Petitioner alleges, and is supported in this regard by two affidavits submitted by the Acting Principal and the Chief Educational Officer of BTHS, that given the demographic composition of the high school, a graduate satisfying such criteria is, and will continue to be, "impossible" to find. As a result, they posit a general scholarship benefitting any enrolled student engaged in approved courses with appropriate grades would satisfy the decedent's intent. Again, the Court finds this argument totally unpersuasive.
The decedent unequivocally did not wish to confer a benefit on BTHS as an institution, but on a graduate thereof who fit specific criteria. Apparently decedent was seeking to reward a student most nearly resembling himself. While clearly graduation from BTHS was an important consideration in this regard, the Court can not find it is a factor so overwhelming that its current inability to be satisfied should render moot all the other requirements set forth. To accept petitioner's position is to find that decedent really intended to benefit a group of candidates who fit none of the scholarship criteria (a male graduate of BTHS of Germanic ancestry with a certain academic average, attending college in pursuit of an engineering degree) as opposed to candidates who satisfy all the criteria, except possibly attendance at BTHS. The Court is absolutely unconvinced by petitioner's argument in this regard, especially considering the specificity in which decedent set forth all of his other testamentary dispositions.
The Court concurs with petitioner's statement that if decedent had only consulted with BTHS prior to drafting his will the Court would not be facing another cy pres application. However, it is conjecture to conclude that would be due to decedent's drafting of his will in the manner suggested by petitioner. Indeed, it is just as likely that BTHS might not have been involved in the process at all. Nor, despite the policies of BTHS, does the limitation of this private trust regarding gender go so far as to render it void as against public policy (see Matter of Wilson , 59 NY2d 461, 472 -473 [1983] ; see also Estate of Post , 2 AD3d 1091 [3d Dept 2003] ).
Finally, petitioner's argument that decedent's overriding primary concern was the erection of a plaque in his memory at BTHS is unavailing and, quite frankly, more akin to a thought process where the tail wags the dog. Clearly, based on the supporting affidavits, the reason a plaque can not be erected at BTHS in decedent's memory is solely due to internal rules and regulations of the school which are separate and apart from the administration of the trust. Tellingly, even if the trust had been written in a manner to ensure any student currently attending BTHS could be granted such scholarship, it appears BTHS would still not have erected a plaque in decedent's name as such honorariums are granted solely to individuals bequeathing funds to a school-based program or an endowment, which, again, decedent clearly did not do.
Although petitioner's proposal clearly fails to accomplish the objectives of the charitable bequest, the court may invoke its cy pres powers to alter the disposition on its own initiative and may approve an alternate plan for the fund that will be generally in keeping with the testator's intent ( EPTL § 8-1.1 [c][1] ; see Estate of Wilson, supra; Estate of Post , supra; cf. Matter of Scott , 8 NY2d 419 [1960] ).
The court, in the exercise of its powers, has selected an alternative plan that has been presented by the New York Community Trust which the court finds is most nearly consistent with the intent and purposes of the charitable bequest, and which will require the least restrictive modifications to decedent's will (see Sherman v. Richmond Hose Co., 230 NY 462, 473 [1921] ).
Accordingly, after a hearing and based upon the evidence presented, the court finds that the petition should be granted to the extent that the cy pres doctrine is applied to amend the modification of the will, as set forth in the Court's decree of August 4, 2011, to provide that the body of candidates eligible for a scholarship award shall be expanded to include a male graduate of a New York City high school, with preference given to a graduate of BTHS, having Germanic ancestry on either maternal or paternal sides of the family.
That branch of the petition seeking to transfer the scholarship funds from the trust to the Alumni Foundation is denied.
Letters of trusteeship issued to A. Paul Bogaty are hereby revoked.
A. Paul Bogaty, is directed to render and judicially settle his account as trustee and cause citation to issue within thirty (30) days of service upon him of a certified copy of the decree to be submitted herein.
Successor letters of trusteeship shall issue to New York Community Trust upon it duly qualifying ( SCPA § 1502 ). The successor trustee is permitted, in the trustee's sole discretion, to administer and distribute the trust funds in accordance with Article Fifth of the decedent's will as modified by this Court's decree of August 4, 2011, and as further modified herein.
A. Paul Bogaty is directed to furnish copies of all books and records pertaining to the Scholarship Trust and to transfer the scholarship funds to New York Community Trust within ten (10) days of its appointment as successor trustee.
The prior reformations set forth in the decree of the Court dated August 4, 2011 shall otherwise remain in full force and effect.
The Clerk of the Court is directed to notify counsel for the petitioners and counsel for the New York Community Trust of this decision.
Submit decree on five (5) days notice to the New York Community Trust.