Matter of Chamberlain

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: January 7, 2016 521155
________________________________
In the Matter of the Estate of
LEON C. CHAMBERLIN,
Deceased.
MEMORANDUM AND ORDER
EAST HEBRON UNITED
PRESBYTERIAN CHURCH et al.,
Appellants.
________________________________
Calendar Date: November 19, 2015
Before: Lahtinen, J.P., McCarthy, Egan Jr., Lynch and
Devine, JJ.
__________
Greenfield, Stein & Senior, LLP, New York City (Gary B.
Freidman of counsel), for appellants.
Eric T. Schneiderman, Attorney General, Albany (Kate H.
Nepveu of counsel), in his statutory capacity under EPTL
8-1.1 (f).
__________
Lahtinen, J.P.
Appeal from an order of the Surrogate's Court of Washington
County (McKeighan, S.), entered March 6, 2015, which, in a
proceeding pursuant to EPTL article 8, denied petitioners'
application to remove the investment restrictions of decedent's
will.
Leon C. Chamberlin (hereinafter decedent) died in 1999 and
his will made bequests to, among many others, three churches –
petitioners herein – in the amounts of about $217,000, $460,000
and $260,000. The will directed each petitioner to hold such
funds in trust, invest only in insured bank accounts and
-2- 521155
government securities and use the net income for maintenance of
the physical property of each church. Because the return on
investments in insured bank accounts and government securities
has been so low for many years, petitioners applied pursuant to
EPTL 8-1.1 (c) to amend the current investment restrictions and
authorize them to invest in accordance with the Prudent Investor
Act set forth in EPTL 11-2.3. The Attorney General appeared
pursuant to EPTL 8-1.1 (f) and consented to the change sought by
petitioners. Finding the absence of an unforeseen change in
circumstances, Surrogate's Court denied the petition and this
appeal ensued.
EPTL 8-1.1 (c) embodies "New York's statutory articulation
of cy pres and equitable deviation" (Board of Trustees of Museum
of Am. Indian, Heye Found. v Board of Trustees of Huntington Free
Lib. & Reading Room, 197 AD2d 64, 75 [1994], lv denied 86 NY2d
702 [1995]). Equitable deviation involves altering or amending
an administrative provision, whereas cy pres effects a
substantive change (see Bogert's Trusts and Trustees § 396 [2015]
[Note: online treatise]; Matter of Uris, 27 Misc 3d 1205[A], 2010
NY Slip Op 50552[U], *2 [Sur Ct, Nassau County 2010]). Thus,
equitable deviation may be appropriate where cy pres is not
because an administrative change can be made without altering the
purpose of the trust or changing its disposition provisions (see
Bogert's Trusts and Trustees § 396 [2015] [Note: online
treatise]). Some cases addressing common-law equitable deviation
required an unforeseen change in circumstances (see generally 11
Warren's Heaton, Surrogate's Court Practice § 188.07 [2015]
[Note: online treatise]), whereas the statutory provision
applicable to charitable trusts does not require the change to be
unforeseen (see EPTL 8-1.1 [c]; cf. N-PCL 555 [b]). The statute
provides that "whenever it appears to [Surrogate's Court] that
circumstances have so changed since the execution of an
instrument making a disposition for religious . . . purposes as
to render impracticable or impossible a literal compliance with
the terms of such disposition, the court may, on application
. . . make an order or decree directing that such disposition be
administered and applied in such a manner as in the judgment of
the court will most effectively accomplish its general purposes,
free from any specific restriction, limitation or direction
contained therein" (EPTL 8-1.1 [c] [1]).
-3- 521155
Here, decedent's intent was to provide each petitioner with
a principal amount of money from which funds would be generated
to assist in the maintenance costs of the physical property of
each. Petitioners seek limited additional authority regarding
the manner in which investments of the principal are
administered, they do not seek to alter the specific charitable
purpose or disposition provisions (compare Matter of Hummel, 30
AD3d 802, 804 [2006], lv denied 7 NY3d 713 [2006]). Petitioners
established that the current investment restrictions have for
many consecutive years reduced the income from each trust to
essentially negligible amounts. Those restrictions have become
impracticable and frustrate each trust's purpose of generating
funds to assist in church maintenance. Under analogous
circumstances, courts have cautiously exercised their equitable
power to permit deviation of investment restrictions (see Matter
of Aberlin, 264 AD2d 775 [1999]; Matter of Muir, NYLJ, Jun. 7,
2013 at 21, col 1 [Sur Ct, NY County 2013]; Matter of Siegel, 174
Misc. 2d 698 [1997]; Matter of Talman, 126 Misc. 2d 860 [1984]; see
generally Bogert's Trusts and Trustees § 396 [2015] [Note: online
treatise]). We deem such relief appropriate here.
McCarthy, Egan Jr., Lynch and Devine, JJ., concur.
ORDERED that the order is reversed, on the law, without
costs, petition granted and the investment restrictions in
decedent's will are amended to permit petitioners to invest the
subject trust funds in accordance with the Prudent Investor Act
as set forth in EPTL 11-2.3.
ENTER:
Robert D. Mayberger
Clerk of the Court