- University Retains Gift Despite Inability To Comply With Original Restriction On Gift
- December 7, 2004 | Author: Tamara E. (Goulston) Kolz
- Law Firm: Holland & Knight LLP - Boston Office
Every university wants to encourage their alumni to include the university in their estate plans or charitable giving plans. But what happens if the gift is designed to occur in the future and the fund for which the alum earmarked his gift no longer exists when the time finally comes for distribution? Can the university still collect the money?
The Supreme Court of Missouri recently addressed this issue in Obermeyer v. Bank of America, N.A., 140 S.W.3d 18, 2004 WL 1381266 (Mo.). Dr. Joseph Kimbrough, an alum of Washington University, established a charitable trust where a fund at the University was named as the ultimate beneficiary. Unfortunately, by the time the remaining trust property was to be distributed to Washington University, the University had discontinued such fund. Dr. Kimbrough's heirs at law sued, claiming that the gift to the University should fail and that the trust property should revert to them as Dr. Kimbrough's heirs.
Enter the pivotal character: the cy pres doctrine, the origin of which is the French phrase "cy pres comme possible," meaning "as near as possible." The cy pres doctrine is a rule applied by equity courts which provides for the interpretation of charitable bequests when the purpose for such bequest is no longer possible. When such an impossibility exists, the Court must determine the appropriate substitute which comes closest to fulfilling the purpose of the gift. The cy pres doctrine is appropriately applied where the donor has general rather than specific charitable intent.
While the heirs of Dr. Kimbrough argued that the trust's language allocated the gift to Washington University "for the exclusive use and benefit" of the specified fund and required an interpretation that Dr. Kimbrough had a specific charitable intent, the Court failed to narrowly construe such language. The Court found that to adhere too strictly to the words of the donor may result in the defeat of his ultimate purpose. Instead, the Court noted that all of the circumstances evidencing the donor's intent must be considered.
In resolving the issue, the Court considered (i) the many gifts by Dr. Kimbrough over the years, many of which were unrestricted; (ii) the apparent lack of any contemplation on Dr. Kimbrough's part that the trust estate would go to his distant heirs; and (iii) the tax savings achieved by distributing the remainder of his estate to a charitable entity, and found such facts evidenced Dr. Kimbrough's general charitable intent. Having found the existence of a general charitable intent, the court applied the cy pres doctrine and ultimately determined that Dr. Kimbrough's objective to further dental education at Washington University was carried out "as near as possible" by the use of such assets by the University for research and practice in specifically designated dental related areas.