Henshaw v. Flenniken

Mr. Justice Neil

delivered the opinion of the Court.

- -This cause originated in the Chancery Court of Knox County upon a bill filed by the Trustees of the Immanuel Baptist, Church against the heirs of Robert G. Flenniken, in which complainants sought a decree holding void a restraint on tlie alienation of certain lands devised to the trustees of said church. That part of the testator’s will which is claimed to be void on the ground 'that it creates a perpetuity is as follows :

“Section 2. I give and bequeath to my wife Harriett A. Flenniken, all of my property of every kind and character, real, personal and mixed, during her natural life, and at her death I direct that the title to all my lands with all the appurtenances thereto, be and vest in the Trustees of Immanuel Baptist Church, at Vestal, Knox County, Tennessee, but said lands shall not be sold or title parted with by said Trustees of said Immanuel Baptist Church, but said lands to be kept and rented or leased and the profits thereof to be used in furthering the work of said Church, in paying the expenses of said Church, and in raising funds for Foreign, Home and State Missions for the Missionary Baptist Church. ’ ’

The lands herein devised consist of about twenty-one acres and lie within the corporate limits of the City of Knoxville. The bill alleges that the complainants, trustees of the church, have had no funds to develop and improve the property and that it is to the advantage of the church to sell said lands and that the proceeds should be used by the church “in furthering the work of the church, in paying the expenses of said church, and in raising funds for foreign, home, and state missions for the Missionary Baptist Church.” The complainants allege that the testator devised the property for the foregoing-purposes. It is contended that the'restrictive clause in the will against the sale of the land is a mere directive provision and void because constituting a restraint on alienation.

The reasons advanced by complainants for desiring to sell the property in question are found in the following averments of the bill, which are conceded to be true:

“Said land have thereon nine houses, all of which are very small and cheaply constructed except two, and all are in bad state of repair.; that the expenses of making repairs would not be justified, even if the complainants had the money. Complainants and their predecessors in interest have rented, the houses the best they could and paid the taxes. The gross income during the past three years has averaged about $725.00' and the taxes and expenses have been about $325.00, leaving a net yearly income of only $400.00.”

It is averred that when the present demand for housing space is past the income from the property will be greatly reduced; that complainants do not have the necessary funds to repair and improve the property so as to increase their rental value. Complainants say that the officers and members of said Immanuel Baptist Church have planned and hoped to erect a new and larger church building on other property and it would be greatly to the advantage of all to sell the lands in question and use the proceeds “for the construction of a new and suitable building for their church, Sunday School, and other religious and missionary purposes.” It is averred that they have received an offer of $10,000 from J. S. Cameron of Knoxville for the property, provided he can get a good title to it, and he had made a deposit of $1,000 as evidence of his good faith in the matter, and that the members have agreed to accept the offer if the courts should authorize the sale.

The bill prayed in the alternative that, if mistaken in the view that the restriction in the will is void, the court decree that “it is manifestly for the interest of complainants and the said church that they be excused from the direction of the devisor not to' sell the property and that they be authorized to sell,” etc. The foregoing prayer for alternative leave is based upon the averment that “conditions have greatly changed since the will was made, which changes the deceased could not foresee; and because of the fact that the church and complainants, its trustees, cannot afford to spend the money necessary to properly develop and improve the property and make it profitable; that the proceeds of sale can be used to a better advantage in furthering the interest of the church in paying expenses and in raising funds for foreign, home, and state missions,” etc., all of which “was the intention and purpose of Robert G. Flenniken in making the devise of said lands. ’ ’

It appears that a pro confesso was taken against a number of the defendants who had been served with process. Other defendants demurred to the bill upon the following grounds:

“ (1) That the bill shows on its face that the complainants have no interest in the property which can be sold.

“ (2) That the bill shows on its face that the complainants are attempting to dispose of the property in a manner which is lawfully prohibited in the will under which complainants claim title.

“ (3) That the restraint of alienation contained in the will is one which can lawfully be made as to property given to a church or other charitable body.

“(4) That , all the,parties in interest are not made parties to the suit and that there are not such parties as are necessary to give the court jurisdiction in this cause.

“(5) That the bill sets out no facts giving complainants any ground for relief as against these defendants.”

It is conceded by all parties that the testator created a valid chai’itable trust. No question is made as to its validity and all our cases dealing with the question of such trusts need not be referred to or considered. It cannot be doubted but that the trustees of the church took title to the lands here involved immediately upon the death of the testator and their acceptance of the trust. No question is made but that they have administered it in accordance with his desires as expressed in the will.

Under the assignments of error there are two questions presented which are determinative of the case: (1) Does the restraint upon the sale and transfer of title to this property create a perpetuity that is forbidden by law? (2) Has a court of equity, in the exercise of its inherent jurisdiction, authority to authorize the sale of said lands on the ground that under the facts and circumstances it is for the best interest of all parties and would more effectively contribute toward carrying out the real wishes of the devisor?

The chancellor in a brief memorandum opinion said: “The demurrer should be sustained for the reason that this will giving all of said property to the church created a charitable or religious trust recognized under our law and that the testator had a lawful right to provide that said property should not be alienated.”

We readily agree with the learned chancellor that the testator had the right to thus place a total restraint upon the right of alienation, but this fails to solve the difficulty confronting the trustees of the church, who are desirous of selling the property for the reasons stated in the bill and which are conceded to be true. It cannot be doubted that a similar restriction in a conveyance or devise to an individual, or in trust for purposes not of a charitable nature, would be illegal. And where it is a condition subsequent, the beneficiary would take title free from all restraint against alienation. But does the same rule apply to devises of property in trust for a charitable or public use? In II Perry on Trusts arid Trustees,.sec. 737, 7th Ed., it is said:

“A perpetual trust cannot be created for an individual and his heirs in succession forever; and herein a charity differs, for a trust may be established which contemplates the payment of the income of a certain fund to some charitable purpose forever. Indeed, it is always hoped, where funds are given in trust, the income 'to be applied to some church, almshouse, hospital, or school, that such institution, will exist indefinitely, and that the donor’s bounty will be a perennial spring for generations. At the same time, it is to be observed that this rule, applied to charities, does not render any particular property inalienable; for the court can decree the sale of any trust property when an exigency arises, and even the soil upon which a church, hospital, almshouse, ór schoolhouse is built, can be sold by a decree in equity, when it is der sirable to remove from that particular place to another.”

We think under the foregoing authority and the numerous cases cited in support of it that, where there is a devise of land in trust for charitable purposes, coupled with an express restraint against sale and passing title, such lands must be considered inalienable by the trustees. Whilé the trustees are without power, to sell, due to the express limitation in the instrument creating the trust, there is abundant authority to sustain the power of the chancery court to order a sale of such property, as where it will clearly sustain the general purpose and intention of the devisor rather than nullify or impair it. Franklin v. Armfield, 34 Tenn. 305; 14 C. J. S., Charities, sec. 48, p. 505.

In Scott on Trusts, vol. 3, sec. 381, the author says:

“The power of a court of equity to permit or direct a deviation from the terms of the trust is at least as extensive in the case of charitable trusts as it is in the case of private trusts. The courts will direct or permit a deviation from the terms of the trust where compliance is impossible or illegal, or where owing to circumstances not known to the settlor and not anticipated by him compliance would defeat or . substantially impair the accomplishment of the purposes of the trust. Thus it has been held in numerous cases that the court may authorize the sale of property although such sale is not authorized or is forbidden by the terms of the trust.”

A number of cases are cited in support of the foregoing-text.

In Rolfe & Rumford Asylum v. Lefebre, 69 N. H. 238, 45 A. 1087, 1088, it was held that a direction in a gift for a charitable trust that the real estate devised should not be alienated for ninety-nine years was not void as a perpetuity. In the same case, however, it was ruled that a sale might be effected by and through the jurisdiction of the chancery court. Mr. Justice Parsons in deciding the question said:

“A condition that the trustees of a charitable trust shall not alienate the land which is the property of the trust will not prevent a court of chancery from permitting, in case of necessity arising from unforseen circumstances, the sale of the land and the application of the proceeds to the purposes of the trust. Jones v. Habersham, 107 U. S. 174, 183, 2 S. Ct. 336, 27 L. Ed. 401; Ould v. [Washington] Hospital, 95 U. S. 303, 24 L. Ed. 450.”

Counsel have cited many cases where the court has dealt with the right of trustees to encroach upon the corpus of a trust estate (a private trust) for the benefit of the cestui que trust. These cases have no application here except by way of analogy. It is very clear that in a number of these cases the chancery court authorized a deviation from the trust in aid of the beneficiary upon the theory of “imputed intention” of the settlor or donor. In other words, it was considered that had the testator or settlor been able to foresee the changed conditions of the cestui que trust he would have given his consent to a diversion of the trust fund. Bennett v. Nashville Trust Co., 127 Tenn. 126, 153 S. W. 840, 46 L. R. A. (N. S.) 43, Ann. Cas. 1914A, 1045; Weakley v. Barrow et al., 137 Tenn. 224, 192 S. W. 927. The principle in these cases was also applied in Cowan v. Hamilton National Bank, 177 Tenn. 94, 106, 146 S. W. (2d) 359.

Counsel for appellants seem to think the Court has applied the rule of cy pres in these and other cases and that we should do so in the instant case. In making this contention they are in error. This state has never recognized the rule. In fact, it has been repudiated, expressly. In holding that a court of equity-may order a sale of property held for a charitable use, the intention of the devisor is held to be of paramount importance. There is no authority in the laws of this state for a court of equity to divert trust funds, devised and bequeathed for a legal purpose, to some other lawful purpose than that named by the testator under the cy pres rule.

In Weakley v. Barrow, supra, 137 Tenn. page 233, 192 S. W. 927, 929, the action of the Court in ordering a sale .of trust property rested its authority upon the inherent jurisdiction of the chancery court,- and not upon the doctrine, of cy pres, which is a rule of construction. Mr. Justice Williams, speaking for the Court, said:

‘ ‘ The exercise of the power depends, not on expediency, but on exigency. When considerations of necessity, which rise to the dignity of an exigency or emergency, make their appeal to a court of equity, its power to modify the terms of the trust and bring to sale property withheld from sale in terms (at least where the trust is created by deed) is exercised, not to defeat the trust, but in furtherance of the trustor’s purposes towards his beneficiaries, by affording relief from after-arising conditions that would defeat his purposed bounty. The court, even then, proceeds with great caution, and should hold as nearly as may be to -the mode of management set forth by the trust-creator.”

There can be no doubt but that the testator, Robert G. Flenniken, was devoted to his church; that he had in mind its future welfare, the preaching of Christianity at home and abroad. When he made his will there was no attempt to allocate the income or any part of it to different church purposes, but his thought was ’to aid this church in all its varied activities. There is nothing said in the will about the property reverting to his estate or a gift over in the event the trustees violated the trust. He had the utmost confidence in them and that they would carry out his wishes. It appears, however, he failed to consider the cost of keeping the property in repair, that, the trustees not having funds to improve it, it would deteriorate and be of little value to the church. Under the averments of tlie bill the property has approximately no rental value at the present time, less than $50 a year for each house not counting the expense of collecting the rent. It does have a sale value of $10,000. Considering the changed conditions as they are shown to exist today, it could not possibly be his wish that the church hold the property until it has no rental value at all, or is lost entirely at a tax sale. This is within the realm of probabilities.

We think the learned chancellor was in error in dismissing complainant’s bill for the reasons stated in this opinion. The cause is therefore reversed and remanded to the end that the court may hear proof, if necessary, and determine if it is for the best interest of all parties that the sale of the property in question be made upon such terms as the chancery court may direct, or the present offer of Cameron be accepted, and direct the execution of a deed by the trustees to the purchaser.

The defendants will pay the costs of the appeal.