Opinion
No. 34007
Decided June 1, 1955.
Declaratory judgments — Act liberally construed — Declaratory judgment action a procedural remedy — Pleadings construed in favor of pleader — "Desires," an expression of present purpose and intent — Testamentary trusts — Bona fide dispute as to interpretation of will — Obligations of trustee and rights of beneficiaries — Action to interpret will — A chancery case — Parties — Jurisdiction of Probate Court — Charitable trusts — Art gallery and student loan foundation — Appeal on questions of law and fact.
1. The remedy afforded by the Declaratory Judgments Act is to be liberally construed and freely applied.
2. By virtue of Section 10501-53, General Code (Section 2101.24, Revised Code), and Section 12102-4, General Code (Section 2721.05, Revised Code), one who as trustee under a will and as an individual is interested in a provision of the will authorizing the removal of certain of testator's real estate from the trust and the substitution of a sum of money to take its place may bring and maintain an action for a declaratory judgment in the Probate Court to secure a determination and declaration as to his obligations as trustee and as an indicidual with respect to such matter and as to the rights of the trust beneficiaries, where there is a present bona fide dispute between or among those concerned as to the interpretation of the will and doubt exists as to the proper interpretation.
3. An action for a declaratory judgment is sui generis in the sense that it is neither one strictly in equity nor one strictly at law; it is purely a procedural remedy wherein the court having jurisdiction may apply such principles of equity or of law as may be necessary to adjudicate the issues presented.
4. Pleadings are to be construed liberally in favor of the pleader to promote and facilitate the statement of a cause of action or defense.
5. Where in his petition in an action for a declaratory judgment the plaintiff alleges in effect that there are existing differences between him, as trustee under a will and as an individual, and the trust beneficiaries with respect to the removal of real property from the trust and the substitution of a sum of money in lieu thereof, and that he "desires to exercise his right to discontinue the testamentary trust" by the removal of such real estate and the substitution of a sum of money therefor upon the adoption by the court of his interpretation of the will, the word, "desires," as used in the petition may and should be treated as the expression of a present purpose and intent to act rather than as indicative of some possible contemplated future action.
6. An art gallery organized as a corporation not for profit and a student loan foundation also organized as a corporation not for profit and engaged in assisting needy students at a university are charitable organizations, and a testamentary trust created for their benefit and support is a charitable trust.
7. An action for a declaratory judgment which has as a principal purpose the interpretation of a will establishing a charitable trust is equitable in nature and constitutes a chancery case, and an appeal on questions of law and fact lies to the Court of Appeals from a judgment of the Probate Court interpreting such will and declaring thereunder the obligations and rights of the parties to the action.
APPEAL from the Court of Appeals for Franklin County.
In May of 1946, Frank L. Sessions, as trustee under the will of Juliette Sessions, deceased, and as an individual, brought an action "for declaratory judgment and construction of a will" in the Probate Court of Franklin County, Ohio, where such will had been admitted to probate. Named as defendants were Mary Skelton, The Columbus Gallery of Fine Arts, an Ohio corporation not for profit, and The Ohio Student Loan Foundation, an Ohio corporation not for profit organized to assist needy students at The Ohio State University.
Item VIII of the will is the subject of this action. In such item the testatrix directed the continuance of a trust involving one-half of her undivided one-half interest in a business property in the city of Columbus, which trust was created for the benefit of designated beneficiaries, including the three defendants above named, "until my brother, Frank L. Sessions, or his heirs or assigns, shall pay, or cause to be paid, to a solvent bank or trust company, in trust, for each of the beneficiaries hereinafter named, a sum which, at five per cent (5%), will yield the annuities hereinafter granted."
Item VIII then directs that $5,000 per annum be paid to The Columbus Gallery of Fine Arts; that $200 per year be paid to Mary Skelton, during her lifetime; and that "the remainder of the income * * * be paid to The Ohio Student Loan Foundation * * * to be used by said foundation for loans to women students."
The petition asks for the "determination, judgment, decree and direction of the court in answer" to nine questions, all of which relate directly or indirectly to the amount of money which Frank L. Sessions or his heirs would have to supply to enable them to remove the real property from the trust estate, become the owners thereof, and comply with the terms of item VIII of the will.
In the questions propounded the sum of $104,000 is proposed as an amount sufficient to satisfy the requirements of such item.
An answer and cross-petition was filed by The Ohio Student Loan Foundation in which it denies and opposes the right of Frank L. Sessions or his heirs to terminate the trust created in its favor by item VIII of the will without first making provision for it as intended by the testatrix and asks that its rights as a beneficiary be protected. In such answer and cross-petition The Ohio Student Loan Foundation propounds 11 questions for the court's determination.
In its order and decree the Probate Court made the following determinations:
"6. That at this time the following persons are basically interested in the controversy: Frank L. Sessions, The Columbus Gallery of Fine Arts, and The Ohio Student Loan Foundation.
"7. That, by virtue of a former order and decree that is now binding upon all the parties, Frank L. Sessions has the right to exercise the power of termination given him under section A of item VIII of the will, but that the details connected therewith must either be determined and fixed by this court or be approved by this court.
"8. That The Ohio Student Loan Foundation has a vested and continuing interest of which it cannot be deprived by the exercise of any right given to Frank L. Sessions or his heirs or assigns.
"* * *
"10. That the termination of the present trust in respect of the real estate and the substitution of new assets in trust must be with the approval and under the direction of this court.
"* * *
"12. That the will and the right to terminate the trust do not permit Frank L. Sessions to make a profit, and that he must pay full value for the real estate through the substitution of assets.
"13. That, unless the parties mutually agree upon the value of the real estate at the time of termination, it will be necessary for the court to fix that value at the time of termination.
"14. That, if the present rentals be taken as a base for that determination, the value might possibly be determined to be an amount that at five per cent (5%) would produce the present rental income.
"15. That, even if there be a new trustee, with substituted assets, the income should be distributed to The Columbus Gallery of Fine Arts and The Ohio Student Loan Foundation just as it is now distributed, first $5,000 annually to The Columbus Gallery of Fine Arts and, then, the remainder annually to The Ohio Student Loan Foundation."
Frank L. Sessions, as trustee and individually, and the individual defendants being dissatisfied by the judgment and decree of the Probate Court perfected separate appeals on questions of law and fact to the Court of Appeals, whereupon The Ohio Student Loan Foundation and The Columbus Gallery of Fine Arts separately moved "for the dismissal of this appeal on questions of law and fact and, if it be retained that it be restricted to questions of law only."
In response to such motions the Court of Appeals dismissed the appeal on questions of law and fact but retained the cause for determination on questions of law only. In its opinion, however, that court expressed the view "that there is no justiciable issue before the court."
The cause now finds lodgment in this court under our Rule XXIV and the matter to be decided is whether the Court of Appeals acted properly in retaining the cause for determination on questions of law alone.
Messrs. Calfee, Fogg, McChord Halter, for plaintiff appellants.
Messrs. Butler, Addison Werum, Mr. Francis J. Wright and Messrs. Jenkins, Williams, Wendt, Murray Deeg, for appellees.
Messrs. Gingher Christensen, for defendant appellants.
Although the precise problem now engaging the attention of this court is whether the Court of Appeals was correct in retaining the cause for disposition on questions of law alone, we think it at least appropriate and expedient to discuss and decide the following question:
Does this action for a declaratory judgment present justiciable issues cognizable by the Probate Court in the first instance and, if so, are the matters which the Court of Appeals is asked to decide of an equitable nature constituting a chancery case, thus requiring that court to entertain the appeal on questions of law and fact?
If the first part of the above question is answered in the affirmative, the Probate Court of Franklin County was the proper forum. The will of Juliette Sessions had been admitted to probate in that court, her estate was being administered there, and Frank L. Sessions was acting as trustee under appointment by such court.
By the terms of Section 10501-53, General Code (Section 2101.24, Revised Code), the Probate Court is given jurisdiction to construe wills, to render declaratory judgments and to direct and control the conduct of fiduciaries. That section provides further:
"The Probate Court shall have plenary power at law and in equity fully to dispose of any matter properly before the court, unless the power is expressly otherwise limited or denied by statute."
Although Frank L. Sessions, as trustee, might have brought an action under Section 10504-66, General Code (Section 2107.46, Revised Code), to ascertain his rights and duties as trustee under item VIII of Juliette Sessions' will, he was interested and concerned as both trustee and as an individual and resorted to Section 12102-4, General Code (Section 2721.05, Revised Code), contained in the chapter on declaratory judgments, which authorizes any person interested in the administration of a trust or in the estate of a decedent to have a declaration of rights or of legal relations with respect to directing the executors administrators, trustees or other fiduciaries to do or abstain from doing any particular act in their fiduciary capacity, or to have determined any question arising in the administration of the estate or trust, including questions respecting the construction of wills and other writings.
Under the decisions of this court, Frank L. Sessions, as trustee and individually, was authorized to seek relief under the Declaratory Judgments Act. See American Life Accident Ins. Co. of Ky. v. Jones, Admr., 152 Ohio St. 287, 295, 89 N.E.2d 301, 306, 14 A.L.R. (2d), 815.
Does the fact that Frank L. Sessions chose the Declaratory Judgments Act as a remedy control the character of appeal he might prosecute from an adverse judgment in the trial court? We do not think so.
It has been observed that an action for a declaratory judgment is sui generis in the sense that it is neither one strictly in equity nor one strictly at law; it may possess attributes of both. Although declaratory judgment actions had their origin in controveries peculiar to equity, such an action may be utilized in a matter which is strictly legal. A declaratory judgment action creates no new or substantive rights, it is purely a procedural remedy, and in determining the issues presented such principles of law or of equity may be invoked as are appropriate. When such an action partakes of equity it calls for the application of equitable principles and when it partakes of an action at law it utilizes any available legal principles necessary to dispose of the issues. See Borchard on Declaratory Judgments (2 Ed.), 237 et seq.
In 1 Anderson on Actions for Declaratory Judgments (2 Ed.), 576, Section 248, it is remarked:
"Equitable powers of courts are exercised in declaratory actions in harmony with the undoubted modern drift and tendency of the courts in dealing with matters presented to them through the instrumentality of a declaratory judgment action. It has been laid down that in connection with actions for a declaratory relief, the court has the broad and comprehensive powers of the courts of equity; in the light of the modern opinions of the courts in dealing with this procedural statute it is submitted that this holding is unassailable."
In 3 Bogert on Trusts Trustees, 472, Section 559, the author states:
"It is elementary that either the trustee or any other party having a financial interest in the trust may obtain from an appropriate court a construction of the trust instrument, and consequently advice as to the exact extent of the powers and duties of the trustee, where there is doubt on the subject. This jurisdiction of the court is frequently expressly set forth in statutes giving the court of general jurisdiction power to construe wills or other instruments which create trusts or conferring on the Probate Court a similar authority with regard to wills. The declaratory judgment acts which have been adopted to a considerable extent in recent years also vest in certain courts this power of construction.
"`Equity has jurisdiction over all matters relating to trust property, and in the execution and administration of the trust, in all cases of doubt as to their rights and liabilities and what their conduct should be, trustees are entitled to and should seek instruction and direction from the court.'" See, also, 1 Bogert on Trusts Trustees, 6, Section 1.
Likewise, 4 Pomeroy's Equity Jurisprudence (5 Ed.), 179, 180, Section 1064, has the following to say:
"Wherever there is any bona fide doubt as to the true meaning and intent of the provisions of the instrument creating the trust, or as to the particular course which he ought to pursue, the trustee is always entitled to maintain a suit in equity * * * and obtain a judicial construction of the instrument, and directions as to his own conduct. * * *
"Among the instances where a suit for a judicial construction is proper is that of a will creating trusts, or giving property in trust. * * *"
The present action is concerned with trust affairs. A declaration by the court is sought as to rights and obligations with respect to the termination of a trust involving testatrix's interest in real property and the creation of a new trust in favor of the named beneficiaries by the substitution of a sum of money for the real property.
In the petition it is asserted that there are differences between Frank L. Sessions and The Columbus Gallery of Fine Arts and The Ohio Student Loan Foundation as to the rights of the latter two upon discontinuance of the testamentary trust established for them by the will of Juliette Sessions and the substitution of a sum, in trust, "which at five per cent (5%) will yield the annuities hereinafter granted" — $5,000 per annum to The Columbus Gallery of Fine Arts and "the remainder of the income" to The Ohio Student Loan Foundation for loans to women students.
The petition alleges further:
"The plaintiff, Frank L. Sessions, desires to exercise his right to discontinue the testamentary trust created by said will, pursuant to item VIII-A thereof, if under the declaration, judgment and decree of this court in this action and proceeding, the conditions pertaining to said discontinuance of said testamentary trust and the rights of said Frank L. Sessions, or his heirs, in and to said real estate described, defined and provided in said will, are as said Frank L. Sessions understands the terms of said will to provide.
"The opposing contentions of the parties hereto aforesaid are based upon their respective construction and interpretation of the said will and codicil of Juliette Sessions, deceased." (Emphasis supplied.)
It will thus be seen that the petition sets out a present and very real dispute among those interested concerning the intent of the testatrix in the language she used in item VIII of her will, and a desire on the part of Frank L. Sessions to exercise the right to discontinue the testamentary trust according to his interpretation of the conditions imposed, followed by the request that the court make a declaration in conformity with his interpretation.
Section 11345, General Code (Section 2309.40, Revised Code), carries the injunction that "the allegations of a pleading shall be liberally construed, with a view to substantial justice between the parties." Hence, the courts of Ohio have often declared in a variety of ways that pleadings must be construed liberally in favor of the pleader to promote and facilitate the statement of a cause of action or defense. 31 Ohio Jurisprudence, 583, Section 49; Heidle v. Baldwin, 118 Ohio St. 375, 381, 161 N.E. 44, 46, 58 A.L.R., 1186.
Applying such rule, the words, "desires to exercise his right to discontinue the testamentary trust," as used in the petition may and should be treated, not as indicative of some possible contemplated action at a future time, but as the expression of a present purpose and intent to act. See Detwiler v. Capone, 357 Pa. 495, 55 A.2d 380.
The petition was met by the answer and cross-petition of The Ohio Student Loan Foundation, which challenges Frank L. Sessions' interpretation of item VIII of the will, alleges that the foundation is a beneficiary entitled to recognition, and propounds questions which if answered in a certain way and according to the foundation's hopes would be to its advantage.
No pleading was filed contesting the propriety of the action for a declaratory judgment. The Probate Court exercised jurisdiction and made a declaration as to the rights of the beneficiaries of the trust provision and the obligations of Frank L. Sessions, or his heirs, in the exercise of the privilege accorded to terminate the testamentary trust.
The remedy afforded by the Declaratory Judgments Act is to be liberally construed and freely applied. Section 12102-12, General Code (Section 2721.13, Revised Code).
Thus, the following statement is made in 1 Anderson on Actions for Declaratory Judgments (2 Ed.), 492, Section 221:
"It is a sound rule of law that a declaratory proceeding may be maintained to construe a will, even if no present action is necessary, if the plaintiff's pleading presents an actual controversy between adverse parties seeking a determination of their legal rights."
And in 2 Scott on Trusts, 1465, Section 259, the remark is made:
"A trustee is not compelled to act at his peril in the administration of the trust. He need not act first and discover later whether his act was in breach of trust. He is entitled to the instructions of the court as a protection."
There can hardly be dissent from the proposition that The Columbus Gallery of Fine Arts and The Ohio Student Loan Foundation are charitable organizations and that the trust created in their favor by the will of Juliette Sessions constitutes a charitable trust.
In the famous case of Commissioners for Special Purposes of Income Tax v. Pemsel, A.C. (1891), 531, 583, Lord Macnaghten said:
"`Charity' in its legal sense comprises four principal divisions: Trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not failing under any of the preceding heads."
A trust established to aid a museum or art gallery comes within the definition of a charitable trust (2A Bogert on Trusts Trustees, 117, Section 374), and the same is true of a trust established to assist students to obtain an education by loaning them money. 2A Bogert on Trusts Trustees, 114, Section 374; Pattillo v. Glenn, Trustee, 150 Fla. 73, 7 So.2d 328; Champlin, Exr., v. Powers, Atty. Genl., 80 R.I. 30, 90 A.2d 787, 33 A.L.R. (2d), 1176; In re Pierce's Estate (Iowa), 60 N.W.2d 894, 902; annotation 33 A.L.R. (2d), 1183.
Finally, in the case of Gearhart v. Richardson, 109 Ohio St. 418, 142 N.E. 890, this court held in the first paragraph of the syllabus:
"An action construing a will creating a charitable trust is equitable in nature, and is, therefore, a chancery case within the meaning of Section 6, Art. IV, of the Constitution of Ohio, as amended September 3, 1912, and appeal lies to the Court of Appeals from a decree terminating such trust."
We conclude that the present action for a declaratory judgment was properly brought and presents justiciable issues. It involves a testamentary trust affecting charitable organizations, it is of an equitable nature constituting a chancery case, and it is properly appealable to the Court of Appeals on questions of law and fact.
Therefore, the judgment of the Court of Appeals is reversed and the cause remanded to that court for hearing and determination as an appeal on questions of law and fact.
Judgment reversed.
WEYGANDT, C.J., HART and BELL, JJ., concur.
Dissent only for the reasons stated in the dissenting opinion in the case of Bradford et al., Admrs., v. Micklethwaite, ante, 301.