In Re: Merger of: Univ. Vol. Fire Dept. into Pt. Breeze Vol. Fire Assoc. ~ Appeal of: Penn 7 Vol. Fire Dept. & N. Bessemer Vol. Fire Dept.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Merger of: Universal :
Volunteer Fire Department into :
Point Breeze Volunteer Fire :
Association :
: No. 1060 C.D. 2019
: Argued: May 15, 2020
Appeal of: Penn 7 Volunteer Fire :
Department and North Bessemer :
Volunteer Fire Department :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION BY JUDGE BROBSON FILED: July 1, 2020
Appellants Penn 7 Volunteer Fire Department (Penn 7) and North Bessemer
Volunteer Fire Department (North Bessemer) appeal the July 10, 2019 order of the
Court of Common Pleas of Allegheny County, Orphans’ Court Division (Orphans’
Court),1 which approved the merger of Appellees Universal Volunteer Fire
1
The Orphans’ Court has jurisdiction over Pennsylvania nonprofit corporations and the
distribution of property committed to charitable purposes as part of the merger of a nonprofit
corporation. 15 Pa. C.S. § 5546(b); Pa. R.J.A. No. 2156. In addition to other matters which by
law are to be heard and determined by the orphans’ court division of a court of common pleas, the
division shall hear and determine the following matters:
(1) Nonprofit corporations. The administration and proper application of
property committed to charitable purposes held or controlled by any domestic or
foreign nonprofit corporation and all matters arising under Title 15 of the
Pennsylvania Consolidated Statutes (relating to corporations and unincorporated
associations) or otherwise where is drawn in question the application, interpretation
or enforcement of any law regulating the affairs of nonprofit corporations holding
Department (Universal) and Point Breeze Volunteer Fire Association (Point
Breeze).2 We affirm.
I. BACKGROUND
Universal is a fire department incorporated in October 1930. (Reproduced
Record (R.R.) at 199a.) Universal’s original application for incorporation stated that
the purpose of the department was “[t]o support the fire engine, hook and ladder,
hose, and all other equipment of a like and similar nature for the control of fires.”
(R.R. at 258a.) The original application for incorporation also provided that
ownership and use of funds and assets through “[f]ees and dues, as well as money
derived from all other sources shall be applied to promote the purpose for which the
corporation is formed.” (Id.) Universal’s constitution and bylaws further described
its purpose as to “preserve life and property and render assistance to any emergency
which may arise in the Municipality of Penn Hills [(Municipality)], and vicinity.”
(R.R. at 80a.) Universal amended its statement of purpose in December 2010, in
relevant part, to provide:
or controlling any property committed to charitable purposes, or of the members,
security holders, directors, officers, employees or agents thereof, as such.
Pa. R.J.A. No. 2156(1).
2
The Office of Attorney General (OAG), which participated in the matter before the
Orphans’ Court, advised by letter dated January 6, 2020, that it is not participating in this appeal.
Because Universal’s and Point Breeze’s proposed merger involves nonprofit charitable
corporations, the OAG must be a party of record because the public, as the real party in interest in
the trust is otherwise not represented. Com. ex rel. Corbett v. Citizens Alliance for Better
Neighborhoods, Inc., 983 A.2d 1274, 1278 (Pa. Cmwlth. 2009). The authority of the OAG in this
regard is now codified in Section 7735(c) of the Uniform Trust Act, 20 Pa. C.S. § 7735(c), which
vests the OAG with the broad power “to enforce a charitable trust.”
2
Amendment 2: The place in this state where the principal
office of the Corporation is to be located is [in] the
Municipality of Penn Hills, County of Allegheny; and
Amendment 3: Said corporation is organized exclusively
for charitable, religious, educational, and scientific
purposes, including, for such purposes, the making of
distributions to organizations that qualify as exempt
organizations under section 501(c)(3) of the Internal
Revenue Code,[3] or the corresponding section of any
future federal tax code.
(R.R. at 96a.)
Universal, in terms of assets and funding, holds a long-term lease on real
property located at Universal Memorial Park in the Municipality.
(R.R. at 115a-117a.) Universal purchased its vehicles and equipment and provided
firefighter stipends out of its funds. (R.R. at 203a.) Until April 2015, Universal
received an annual donation from the Municipality in the amount of $42,000.00, but
Universal did not apply the funds toward asset acquisition or maintenance. (R.R.
at 202a-204a.) Universal is one of numerous fire companies in or near the
Municipality. (R.R. at 608a, 609a.)
In March 1927, three years prior to Universal’s incorporation, Point Breeze
incorporated as a fire department. (R.R. at 547a.) Point Breeze’s original
application for incorporation stated that the purpose of the department was “[t]o
support the fire engine, hook and ladder, hose, and all other equipment of a like and
similar nature for the control of fires.” (Id.) The original application for
incorporation also provided that ownership and use of funds and assets of Point
Breeze through “[f]ees and dues, as well as money derived from all other sources
shall be applied to promote the purpose for which the corporation is formed.” (Id.)
3
26 U.S.C. § 501(c)(3).
3
Point Breeze amended its articles of incorporation in February 2010, in relevant part,
to provide:
Eleventh: Said organization is organized exclusively for
charitable, religious, educational and scientific purposes,
including, for such purposes, the making and distributions
to organizations that qualify as exempt organizations
under section 501(c)(3) of the Internal Revenue Code, or
corresponding section of any future tax code.
(R.R. at 146a.) Point Breeze’s constitution and bylaws further provided that its
purpose “shall be for the prevention of fires and the preservation of life and property
during fires or any other public menaces that occur in the Municipality of Penn Hills
or in the vicinity of said Municipality.” (R.R. at 150a.)
Patricia Berg, a former resident of the Municipality, lived on the same street
as Universal’s fire station. (R.R. at 519a, 629a.) Among the founding members of
Universal was John Baine, the grandfather of Patricia Berg. (R.R. at 638a.) Three
other family members were also listed in the original charter. (Id.) Patricia Berg’s
Last Will and Testament, dated August 14, 2015, provided the following bequest
(Berg Bequest):
I give and bequeath ten per cent (10%) to the Universal
Volunteer Fire Department (Penn Hills No. 6), 2240 Main
Street, Municipality of Penn Hills, Allegheny County,
Pennsylvania, in memory of my grandfather, John W.
Baine.
(R.R. at 611a, 638a.) After Patricia Berg’s death on September 15, 2015, her Last
Will and Testament was probated at the Court of Common Pleas of Allegheny
County, Wills/Orphans’ Court Division docket number 02-15-05967. (R.R.
at 519a.) On June 1, 2017, the Honorable Michael E. McCarthy entered an order,
holding, inter alia, that the Municipality was the proper party to receive the
distribution to Universal and directing the Municipality to hold the funds in a
4
segregated account until further order of the Court. (R.R. at 611a.) The Municipality
received a distribution from the Estate of Patricia Berg in the amount of $360,660.83
and is holding said funds in a segregated account. (R.R. at 610a, 611a.) The monies
associated with the Berg Bequest to Universal are more than $600,000.00. (R.R.
at 209a.)
In December 2016, Universal and Point Breeze signed a plan of agreement
and merger. (R.R. at 9a-16a.) Under the terms of the agreement, Universal would
merge with Point Breeze “to unify as one corporate entity maximizing resources and
to improve community service for emergency services within the communities.”
(R.R. at 9a.) Further, Universal would transfer all assets and liabilities to Point
Breeze as the surviving corporation. (Id.)
On December 19, 2016, while Universal and Point Breeze were planning their
merger, the Municipality adopted and approved two resolutions and one ordinance.
(R.R. at 29a-32a.) The Municipality’s Resolution Number 2016-071 provided:
The North Bessemer Volunteer Fire Department
Station 22 and Penn 7 Volunteer Fire Department
Station 227 is [sic] hereby authorized to provide such
services to the citizens of the Universal 226 Fire District
as may be necessary for the protection of property and
persons situated therein, which include, by way of
example and not of limitation, the extinguishment and
prevention of loss of life and property from fire,
automobile accidents, medical emergencies, hazardous
materials incident, and other dangerous situations.
(R.R. at 31a.) The Municipality’s Resolution Number 2016-072 provided:
The Municipality of Penn Hills hereby revokes any and all
authorizations granted to the Universal Volunteer Fire
Department Station 226 to operate as a fire department
and/or emergency service provider for the Municipality of
Penn Hills. This is to include [e]ngage [sic] in any type of
drill, training, ceremony, and fund raising.
5
(R.R. at 32a.) The Municipality’s Ordinance Number 2016-2493, deeming the
actions necessary “for the purpose of promoting the health, safety, and general
welfare of the Municipality,” decertified Universal as a fire protection and
emergency services provider and appointed North Bessemer and Penn 7 as the fire
protection and emergency service providers for Universal’s Fire District 226. (R.R.
at 29a.)
The Municipality notified the Allegheny County Department of Emergency
Services of the ordinance and resolutions on December 20, 2016, and advised it that
the Municipality would no longer be covering Universal with workers’
compensation and vehicle insurance. (R.R. at 33a.) Universal, following
decertification, returned all municipal equipment to the Municipality but otherwise
remained in existence. (Orphans’ Court Order at 5.) Universal did not appeal or
contest the ordinance. (R.R. at 607a.)
Universal and Point Breeze filed a petition with the Orphans’ Court for the
“Approval of the Plan of Merger” on February 23, 2017, seeking approval from the
Orphans’ Court to merge and create a surviving corporation—Point Breeze
Volunteer Fire Association—and “to become one Fire Company providing services
to those same municipal jurisdictions and fire districts as prior to the [m]erger.”
(R.R. at 6a.) Universal and Point Breeze attached to the petition for merger their
executed agreement and plan of merger; a statement of merger filed with the
Department of State, Bureau of Corporations and Charitable Organizations; and a
letter dated January 9, 2017, addressed to the OAG, informing it of the proposed
merger. (R.R. at 1a-22a.) Universal copied the Municipality on the letter. (R.R.
at 22a.)
6
The Municipality filed a response in opposition to the petition for merger,
citing Universal’s decertification and the subsequent certification of North Bessemer
and Penn 7 to provide fire and emergency services in Universal’s former fire district.
(R.R. at 26a.) The Municipality also asserted that the OAG had not provided a letter
of “no objection,” and the time period for action by the OAG had not expired. (R.R.
at 27a.)
North Bessemer, Penn 7, and Penn Hills Volunteer Fireman’s Relief
Association (Relief Association) filed an objection to the merger of Universal and
Point Breeze, asserting that, due to the decertification of Universal and the provision
of fire and emergency services by North Bessemer and Penn 7 to the fire district
previously serviced by Universal, “the assets of [Universal] would be distributed to
the volunteer fire departments that are responding to fire and emergency calls in
[Universal’s] district, i.e., [North Bessemer] and [Penn 7]” pursuant to the doctrine
of cy pres. (R.R. at 54a, 55a; (Original Record (O.R.), Item No. 5 at 3-4.) They
asserted that, prior to the decertification, Universal “received relief funds to
purchase equipment and it owns substantial assets[,] all of which may be the subject
of an action under the legal principle known as ‘[c]y [p]res.’” (R.R. at 54a; O.R.,
Item No. 5 at 3.) North Bessemer, Penn 7, and the Relief Association requested that
the Orphans’ Court deny the petition for merger, require Universal to account for its
assets, distribute those assets to North Bessemer and Penn 7, and require Universal
to account to the Relief Association for the use of funds that were provided to
Universal to purchase firefighting and emergency services equipment. (R.R. at 55a.)
Universal filed preliminary objections to the objection, asserting that North
Bessemer, Penn 7, the Relief Association, and the Municipality lack standing in this
matter. (R.R. at 62a-73a.) Universal also asserted that the doctrine of cy pres does
7
not apply to the petition for merger, but, unlike the objection to merger, it related the
doctrine specifically to the Berg Bequest. (R.R. at 72a, 73a.) North Bessemer,
Penn 7, and the Relief Association responded, noting that the Berg Bequest “was
reported to the audit judge as being subject to adjudication under the doctrine of
cy pres.” (R.R. at 172a.) North Bessemer, Penn 7, and the Relief Association
clarified that they do not object to the merger of Universal with Point Breeze. (R.R.
at 173a.) Rather, they object to the terms of the merger. (Id.) They contend that,
because North Bessemer and Penn 7 now fulfill the charitable purposes of Universal
(as stated in its Constitution and Bylaws) to respond to fires and emergencies within
the Universal district, under the doctrine of cy pres, the real and personal property
of Universal should be divided between Penn 7 and North Bessemer because they
are fulfilling the charitable purpose Universal can no longer perform. (Id.) Further,
they submit that the Relief Association has funded the purchase of much of the
personal property owned by Universal and this property should be divided between
Penn 7 and North Bessemer or returned to the Relief Association. (Id.)
Thereafter, North Bessemer and Penn 7 filed a motion for protective order, in
which they averred that the matter involves the resolution of the petition for merger
and the disposition of approximately $350,000 as a result of the Berg Bequest, as
well as real property and other personal property owned by Universal, which they
contend are subject to the cy pres doctrine. (O.R., Item No. 13 at 1.) It does not
appear that the Orphans’ Court ever ruled on the motion, although it appears that the
issue may have been resolved during a status conference addressing a variety of
matters related to the case.
Ultimately, by opinion and order dated July 10, 2019, the Orphans’ Court
granted the petition for merger of Universal and Point Breeze. (Orphans’ Court
8
Order at 10.) In its opinion, the Orphans’ Court described Universal’s incorporation
and its charitable purpose over time, the Berg family’s historical relationship with
Universal, the Berg Bequest, and the decertification of Universal. The Orphans’
Court noted that, “[f]ollowing decertification, Universal returned all municipal
equipment to [the Municipality] but otherwise remained in existence and, within a
short time, pursued a merger with . . . Point Breeze.” (Orphans’ Court Op. at 5.) As
to the proposed merger and Universal’s assets, the Orphans’ Court wrote:
Both Universal and Point Breeze are duly organized
Pennsylvania non[]profit corporations and 501(c)(3) tax
exempt charitable corporations. [Point Breeze] is familiar
with the call area served by Universal and has previously
responded to calls within that area. If effected, the
proposed merger would result in a shared utilization of
Universal buildings and grounds, including a real property
located at 2240 Main Street[,] Penn Hills, which is
improved by a fire station and sometimes utilized as a
community center for such regular events as Boy Scout
and Girl Scout meetings as well as non[]profit
organization and community service functions. Universal
also holds a long-term lease on real property located at
Universal Memorial Park. The cost of acquisition and
maintenance of real property, as well as the incidental
costs of property and fire insurance, utility service and
improvements, have been borne by Universal without
contribution from [the Municipality]. Universal has
similarly borne the costs of vehicle purchases and
firefighter stipends.
Vehicles and equipment that are used in providing
emergency and firefighting service as well as other
personalty are owned by Universal. Although Universal
had received an annual donation from [the Municipality],
most recently in the amount of $42,000.00, that donation
was not applied toward asset acquisition or maintenance.
The most recent donation by [the Municipality] had been
made in April 2015.
The record does not support any present claim by [the
Municipality] to a beneficial interest in assets held by
9
Universal. See, e.g., Williams Twp. Bd. of Supervisors v.
Williams Twp. Emergency Co., Inc., 986 A.2d 914, 921
(Pa. Cmwlth. 2009). Nor would any past contributions by
[the Municipality] to Universal necessarily provide the
[M]unicipality with any derivative interest in the Berg
[B]equest.
[The Municipality] and the intervening parties contend,
however, that, inasmuch as Universal is no longer
designated as the first responder for [the former] Universal
[f]ire [d]istrict . . . , the intent of the Berg [B]equest would
not be met by a distribution to Universal. Rather,
according to [the Municipality], . . . the intent of [the] Berg
[B]equest would best be served by distribution of the
bequest to . . . Penn 7 and North Bessemer . . . . Since the
December 2016 decertification of [Universal], Penn 7 and
North Bessemer have served the former Universal [f]ire
[d]istrict. In making those assertions, [the Municipality]
relies upon on [sic] the doctrine of cy pres. That doctrine
directs that a charitable bequest be construed in a manner
which, as nearly as possible, gives effect to the apparent
intent of the testatrix.
....
The assertions made on behalf of Penn 7 and [North]
Bessemer to the effect [that] those departments intend to
apply any funds received from the Berg [B]equest toward
the purchase of fire equipment does not necessarily
enhance their position over that of Universal for purposes
of conforming to the likely intent of the testatrix. A
difficulty with the cy pres argument that is urged in this
case is that Universal is not a defunct entity. It remains an
extant non[]profit corporation which continues to own and
maintain facilities that serve the public in the former
Universal district. [The Municipality] and the intervening
fire companies neither provide nor propose to provide
similar facility access or functions apart from firefighting
within that district. Ms. Berg had resided in the Universal
district until her death. In fact, she had resided on the same
street as the Universal fire station. Given that context, the
observation by Universal that it has historically served a
community function beyond firefighting and presently
remains and is capable and willing to continue such
functions suggests that the original intent of the testatrix
10
would not be frustrated by awarding the bequest to the
merged companies of Universal and Point Breeze.
Further, a current objective of Universal is to merge with
Point Breeze in order to continue firefighting functions.
Should a merger occur through which Universal provides
firefighting services in conjunction with Point Breeze, a
portion of the firefighting component of Universal would
remain, even if that merged department were not the
primary department to serve the Universal district. Point
Breeze is acknowledged to be a competent department
with well-trained membership and a chief who is a state
instructor. In fact, there are no municipal rules that require
firefighters to reside in the districts which they service or
even within the [Municipality]. Nothing would preclude
the eventuality of the merged firefighting unit of Universal
and Point Breeze servicing the former Universal district
on necessary occasions.
....
Petitioners note that the original [Universal] charter
contains the name not only of the decedent’s grandfather,
in whose memory the bequest was made, but also three (3)
other Berg family members. That would seem to lend
support as well to the argument that the bequest in this
matter was intended to assure Universal a continued
presence within the original Universal district. Because
Universal presently continues to exist and will remain
functional in some capacity locally, the result consistent
with the testamentary intent would be to award the Berg
[B]equest to that entity. The charitable purpose of the
Berg [B]equest has not been rendered unlawful,
impracticable or wasteful by reason either of the
decertification of [Universal] or Universal having been
supplanted within [its former fire district] by [North
Bessemer] and [Penn 7].
(Orphans’ Court Op. at 5-9.) The Orphans’ Court concluded by issuing an order
granting the petition for merger and concluding that “[t]he doctrine of cy pres does
not apply in this case.” (Orphans’ Court Order.) North Bessemer and Penn 7
appealed the Orphans’ Court’s order.
11
II. ISSUES
On appeal,4 North Bessemer and Penn 7 argue that the Orphans’ Court, in
granting the petition for merger, erred in concluding that the doctrine of cy pres did
not apply to the case. Universal and Point Breeze counter that the Orphans’ Court’s
decision was appropriate.5
III. DISCUSSION
As we turn to the merits of the matter now before us, it is helpful to understand
the relevant statutory framework. The Associations Code, 15 Pa. C.S. §§ 101-9507,
applies to every association incorporated within the Commonwealth, including
not-for-profit corporations. 15 Pa. C.S. §§ 101, 102. The Entity Transaction Law,
set forth in Chapter 3 of the Associations Code, 15 Pa. C.S. §§ 311-376, includes
provisions pertaining to the merger of associations. The Nonprofit Corporation Law
of 1988 (Nonprofit Law), 15 Pa. C.S. §§ 5101-6146, also included within the
Associations Code, sets forth specific provisions pertaining to nonprofit
corporations. Finally, the Uniform Trust Act (Trust Act), 20 Pa. C.S.
§§ 7701-7799.3, applies, in part, to charitable trusts.
The Entity Transaction Law allows for domestic associations to merge with
one another to form a surviving association. 15 Pa. C.S. § 331(a)(1). Most relevant
to this matter, Section 314 of the Entity Transaction Law, 15 Pa. C.S. § 314,
addresses charitable assets and bequests contained in a will. It provides, in part:
4
“On appeal from an order of [an] orphans’ court, this Court’s scope of review is limited
to determining whether the record is free from legal error and whether the court’s factual findings
are supported by the evidence.” In re Estate of Berry, 921 A.2d 1261, 1263 n.1 (Pa. Cmwlth.),
appeal denied, 934 A.2d 1279 (Pa. 2007).
5
Universal and Point Breeze also argued in their brief to this Court that North Bessemer
and Penn 7 lack standing to appeal, but Universal and Point Breeze conceded at oral argument on
May 15, 2020, that North Bessemer and Penn 7 have standing in this appeal. Accordingly, we will
not address the issue of standing in this opinion.
12
(c) Charitable assets.--Property held for a charitable
purpose under the laws of this Commonwealth by a
domestic or foreign association immediately before a
transaction under this chapter becomes effective may not,
as a result of the transaction, be diverted from the objects
for which it was donated, granted, devised, or otherwise
transferred unless, to the extent required by or pursuant to
the laws of this Commonwealth concerning cy pres or
other laws dealing with nondiversion of charitable assets,
the domestic or foreign association obtains an appropriate
order of a court of competent jurisdiction specifying the
disposition of the property.
(d) Preservation of transfers.--Subject to subsection (c)
and [S]ection 5550 [of the Nonprofit Law, 15 Pa. C.S.
§ 5550,] (relating to devises, bequests and gifts after
certain fundamental changes), a bequest, devise, gift, grant
or promise contained in a will or other instrument of
donation, subscription or conveyance that is made to:
(1) a merging association that is not the surviving
association and that takes effect or remains payable
after the merger inures to the surviving
association. . . .
15 Pa. C.S. § 314.
Similarly, Section 5547 of the Nonprofit Law, 15 Pa. C.S. § 5547, pertaining
to authority to take and hold trust property, provides:
(a) General rule.--Every nonprofit corporation
incorporated for a charitable purpose or purposes may
take, receive and hold such real and personal property as
may be given, devised to, or otherwise vested in such
corporation, in trust, for the purpose or purposes set forth
in its articles. . . .
(b) Nondiversion of certain property.--Property committed
to charitable purposes shall not, by any proceeding under
Chapter 59 (relating to fundamental changes) or
otherwise, be diverted from the objects to which it was
donated, granted or devised, unless and until the board of
directors or other body obtains from the court an order
under 20 Pa. C.S. Ch. 77 (relating to trusts) specifying the
disposition of the property.
13
Section 5550 of the Nonprofit Corporation Law, which is referenced by
Section 314(d) of the Entity Transaction Law, provides:
A devise, bequest or gift to be effective in the future, in
trust or otherwise, to or for a nonprofit corporation which
has:
(1) changed its purposes;
(2) sold, leased away or exchanged all or
substantially all its property and assets;
(3) been converted into a business corporation;
(4) become a party to a consolidation or a division;
(5) become a party to a merger which it did not
survive; or
(6) been dissolved;
after the execution of the document containing the devise,
bequest or gift and before the nonprofit corporation
acquires a vested interest in the devise, bequest or gift shall
be effective only as a court having jurisdiction over the
assets may order under 20 Pa. C.S. Ch. 77 (relating to
trusts) or other applicable provisions of law.
As to whether the Orphans’ Court erred in failing to apply the cy pres doctrine,
Pennsylvania has adopted the Restatement (Second) of Trusts § 399 as the
expression of the doctrine of cy pres in the Commonwealth. Section 399 provides
as follows:
If property is given in trust to be applied to a particular
charitable purpose, and it is or becomes impossible or
impracticable or illegal to carry out the particular purpose,
and if the settlor manifested a more general intention to
devote the property to charitable purposes, the trust will
not fail but the court will direct the application of the
property to some charitable purpose which falls within the
general charitable intention of the settlor.
14
Restatement (Second) of Trusts at § 399. The Pennsylvania General Assembly has
codified application of the cy pres doctrine in Section 7740.03 of the Trust Act, 20
Pa. C.S. § 7740.3, as follows:
(a) General rule--Except as otherwise provided in
subsection (b), if a particular charitable purpose becomes
unlawful, impracticable or wasteful:
(1) the trust does not fail, in whole or in part;
(2) the trust property does not revert to the settlor or the
settlor’s successors in interest; and
(3) the court shall apply cy pres to fulfill as nearly as
possible the settlor’s charitable intention, whether it be
general or specific.
(b) Exception.--A provision in the terms of a charitable
trust that would result in distribution of the trust property
to a noncharitable beneficiary prevails over the power of
the court under subsection (a) to apply cy pres.
The Comment to Section 7740.3 provides that “[t]he doctrine of cy pres is applied
not only to trusts, but also to other types of charitable dispositions, including those
to charitable corporations.” 20 Pa. C.S. § 7740.3, Comment. Thus, under the cy pres
doctrine as set forth in Section 7740.3 of the Trust Act, when a charitable bequest to
a nonprofit corporation “becomes unlawful, impracticable, or wasteful,” the bequest
shall be construed in a manner which, as nearly as possible, gives effect to the
apparent intent of the testatrix.
In their objection to the petition for merger, North Bessemer and
Penn 7 argued that, because they now fulfill the charitable purposes of Universal (as
stated in its Constitution and Bylaws) to respond to fires and emergencies within the
Universal district, under the doctrine of cy pres, the real and personal property of
Universal should be divided between Penn 7 and North Bessemer given that they are
fulfilling the charitable purpose Universal can no longer perform. Throughout the
15
course of the litigation, they have maintained that general theme with a slight twist—
they now focus their argument on the Berg Bequest, contending that the cy pres
doctrine prevents that particular bequest from being distributed to Universal. Not
only do they dispute that the bequest may be distributed to Universal, they contend
that it should be distributed to them in Universal’s stead.
As noted above, Patricia Berg’s Last Will and Testament included a bequest
of “ten per cent (10%) to . . . Universal . . . in memory of [her] grandfather.” (R.R.
at 611a, 638a.) Universal and Point Breeze argue that the clear language of the Berg
Bequest provides reasonable certainty that her intent was to provide Universal—i.e.,
the nonprofit entity—with financial resources. North Bessemer and Penn 7,
however, argue that the intent of the Berg Bequest was to benefit the citizens in the
Universal fire district. They contend that because the Municipality decertified
Universal, thereby prohibiting it from providing fire and emergency services to the
Universal fire district, Universal is no longer able to meet the particular charitable
purpose of the Berg Bequest. Consequently, North Bessemer and Penn 7 argue that
the Orphans’ Court should have applied the doctrine of cy pres.6 North Bessemer’s
and Penn 7’s argument, however, is misplaced in that it is premised on two
misapprehensions: (1) that Universal’s decertification to provide fire and
emergency services to the Municipality and its citizens resulted in an inability to
provide charitable services; and (2) that Universal’s merger with Point Breeze would
in some way not fulfill the terms of the Berg Bequest.
6
We note that Penn 7 has stated that any portion of the Berg Bequest awarded to it would
be applied to replace a fire rescue truck and other firefighting equipment. Similarly, North
Bessemer has stated that any monies awarded to it would be applied toward the replacement of an
outdated rescue/pumper and the purchase of rescue and firefighting equipment. Because
Penn 7 and North Bessemer now service the former Universal fire district, that district would
benefit from equipment modernization. (Orphans’ Court Order at 6, 7; R.R. at 612a.)
16
In In re Independent Fire Company No. 1 (Pa. Cmwlth., No. 1489 C.D. 2018,
filed February 5, 2020) (Independent), we affirmed an order of the Court of Common
Pleas of Lycoming County, denying a petition filed by the OAG. Through the
petition, the OAG sought a rule to show cause why Independent Fire Company No. 1
(Independent), a volunteer fire company, should not be involuntarily dissolved and
its assets distributed pursuant to the cy pres doctrine, given that the municipality in
which it operated had decertified it. On appeal to this Court, the OAG dropped its
pursuit of a voluntary dissolution. At issue before us was “whether the [OAG],
without obtaining an order of involuntary dissolution under the Nonprofit Law, may
acquire and transfer all the general assets of an operating, non-defunct charitable
nonprofit corporation to another nonprofit pursuant to the cy pres doctrine as
codified in the Trust Act.” Independent, slip op. at 1.
In Independent, the OAG, relying on the Comment to Section 7740.3 of the
Trust Act and Section 5547 of the Nonprofit Law, “maintain[ed] that all of the assets
of Independent are held in trust to further its charitable purpose, as stated in the
articles of incorporation.” Id. at 6. The OAG “posit[ed] that once Independent
ceased fighting fires . . . , its charitable purpose was extinguished.” Id. Independent
countered “that it is a volunteer fire company,” the municipality “is not responsible
for its debts or liabilities and does not exercise any financial control over it,” and,
“despite its decertification, it . . . is not defunct or obsolete.” Id. In support of the
continuing viability, Independent noted that “it has over $700,000.00 in assets and
continues to remain a functioning nonprofit corporation that retains members, holds
meetings, maintains minutes, pays bills, files taxes, maintains its real estate and
equipment, enters into contracts, engages in charitable community activities, and
responds to multiple emergency calls.” Id.
17
With regard to the notion that Independent was somehow defunct as a result
of its decertification, relying upon our decision in Lacey Park Volunteer Fire
Company No. 1 v. Board of Supervisors of Warminster Township, 365 A.2d 880 (Pa.
Cmwlth. 1976), we reasoned:
[A]lthough the [municipality] may have lawfully
decertified Independent from fighting fires within its
borders, Independent nonetheless retains exclusive
ownership of the real and personal property that it
possesses and, in general, has the legal authority to decide
the future of its assets and status as a charitable nonprofit
corporation, e.g., whether it desires to dissolve voluntarily
or merge with another firefighting company. In other
words, the fact that the [municipality] enacted the
[o]rdinance [decertifying Independent] does not result in
the destruction or cessation of Independent as a nonprofit
corporation. After all, pursuant to Section 5502(a)(1) of
the Nonprofit Law, a nonprofit corporation, with certain
exceptions, is bestowed with “perpetual succession by its
corporate name.” 15 Pa. C.S. § 5502(a)(1).
Id. at 9. Based upon this reasoning, we reject North Bessemer’s and Penn 7’s
assertion that Universal’s decertification to provide fire and emergency services to
the Municipality and its citizens resulted in an inability to provide charitable
services, thereby triggering the cy pres doctrine.
Furthermore, we agree with the Orphans’ Court that the charitable purpose of
the Berg Bequest has not been thwarted by the decertification of Universal and its
proposed merger with Point Breeze. Patricia Berg executed her Last Will and
Testament five years after Universal amended its constitution and bylaws to move
from a somewhat limited stated purpose of providing emergency services within the
Municipality to add a broader purpose of supporting charitable, religious,
educational and scientific purposes. Moreover, the Last Will and Testament does
not in any way qualify the bequest—i.e., it does not limit the bequest to support fire
18
and emergency services. Universal, despite its decertification, continues to use its
facilities for charitable purposes, including as a community center for such regular
events as Boy Scout and Girl Scout meetings, as well as nonprofit organization and
community service functions. Moreover, the proposed merger of Universal with
Point Breeze, which Universal is entitled to pursue, would allow Universal to
continue firefighting functions, and, therefore, as the Orphans’ Court noted, “a
portion of the firefighting component of Universal would remain, even if that
merged department were [sic] not the primary department to serve the Universal
district.” (Orphans’ Court Order at 8.) “Nothing would preclude the eventuality of
the merged firefighting unit of Universal and Point Breeze servicing the former
Universal district on necessary occasions.” (Id.) Thus, North Bessemer’s and
Penn 7’s assertion that Universal’s merger with Point Breeze would in some way not
fulfill the terms of the Berg Bequest is without merit.
For the reasons set forth above, we conclude that the Orphans’ Court did not
commit an error of law when it declined to apply the doctrine of cy pres in this
matter.
IV. CONCLUSION
Accordingly, we will affirm the order of the Orphans’ Court.
P. KEVIN BROBSON, Judge
19
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Merger of: Universal :
Volunteer Fire Department into :
Point Breeze Volunteer Fire :
Association :
: No. 1060 C.D. 2019
:
Appeal of: Penn 7 Volunteer Fire :
Department and North Bessemer :
Volunteer Fire Department :
ORDER
AND NOW, this 1st day of July, 2020, the order of the Court of Common
Pleas of Allegheny County, Orphans’ Court Division, dated July 10, 2019, is hereby
AFFIRMED.
P. KEVIN BROBSON, Judge