Matter of Wolseley
Annotate this CaseDecided on December 23, 2005
Surrogate's Court, Suffolk County
In the Matter of Charles William Wolseley, Deceased.
582 P 1979
Garfunkel, Wild & Travis, P.C.
Attorneys for Petitioner
111 Great Neck Road
Great Neck, NY 11021
Eliot Spitzer, Esq.
Attorney General of the
State of New York
Charities Bureau
120 Broadway
New York, NY 10271
for ultimate charitable beneficiaries.
John M. Czygier, J.
This is a proceeding by Central Suffolk Hospital Association, as beneficiary of a certain trust created under the last will and testament of this decedent, for permission pursuant to EPTL 8-1.1 ("cy pres") to use the principal and interest of the trust fund to pay down its debt and finance an expansion and modernization project.
Jurisdiction has been obtained over all necessary parties to this proceeding. The Attorney General, Eliot Spitzer, who is a necessary party to this proceeding has appeared and has no objection to the relief requested in the petition.
Pursuant to Article FOURTH of decedent's will, a trust was created for the lifetime benefit of certain named individuals and funded with the estate residue. Upon the death of the surviving income beneficiary, the trustee is to pay over the trust's corpus with accrued income to petitioner "to be used and applied for its Ophthalmology Service, ... to enable said Hospital to increase its services to the community, where I reside, to the end that it shall receive the largest sum available herein for such community needs." The trust was initially funded with approximately $1.4 million dollars and has a current value of approximately $14 million dollars. The surviving income beneficiary died in August of this year and, pursuant to the terms of decedent's will, the trustee has paid over approximately eighty percent of the trust fund to petitioner. Due to the restrictive language, petitioner seeks application of the cy pres doctrine to accomplish the general charitable purposes of the testator by authorizing the use of trust principal and income to implement its revitalization plan. There is no gift-over provision in the event the disposition fails.
Petitioner is a voluntary not-for-profit hospital corporation organized and existing for the purpose of delivering health care services to the surrounding community. Although ophthalmology services are provided by petitioner, last year there were only seven patients [*2]admitted to the hospital for eye related disorders and approximately five hundred emergency or outpatients visits. Petitioner is in the midst of a fiscal crisis which threatens its viability. It appears that this crisis in due to several factors, including decreasing reimbursement for services and/or capital improvements, its limited capacity to serve a growing community and the obsolescence of its facilities. The hospital, as part of a comprehensive plan, seeks to regain financial stability through a combination of debt restructuring and modernization, including expansion and modernization of its ophthalmology department. This plan is vital to the continued viability of the hospital.
The cy pres doctrine, codified in EPTL 8-1.1, is based on a policy to effectuate the general charitable intention of a testator when his specific donative direction cannot be carried out, or is no longer practicable. Under the statute, the Court has the authority to direct the manner in which a charitable disposition should be administered in order to most effectively accomplish the testator's intent whenever literal compliance with the terms of a charitable bequest is impracticable or impossible. This is done by devoting the property placed in trust to a use that furthers the testator's general intention and avoids the circumstances that have rendered the original instructions impracticable.
Before the doctrine may be applied, three tests must be met. First, a charitable gift or bequest must be made. Second, the testator must have demonstrated a general, as opposed to a specific, charitable intent. Third, circumstances must have changed in the period subsequent to the gift or bequest so as to render literal compliance impractical or impossible (see Matter of St. Charles Hospital v. Vacco, NYLJ, Aug. 4, 1995, at 25, col 6).
There can be no doubt that the funds in petitioner's possession are the result of a charitable bequest. Although the testator intended to improve and promote ophthalmology services offered by petitioner's facility, it is clear from his will that his general charitable intent was focused on increasing the hospital's ability to service the community as a whole. Here, the absence of a gift-over provision is a manifestation that the testator had a general charitable intent (see In re Will of Goehrinaer, 69 Misc 2d 145). Lastly, decedent could not have anticipated that his bequest would grow tenfold or that there would be significant changes in medicine which would make literal compliance impracticable.
By utilizing the funds as requested, petitioner will be able to obtain financing for the expansion and renovation of the hospital to carry out the wishes of the decedent. Without the financing necessary to undertake the modernization, petitioner may be forced to reduce community related programs and services which it provides at no charge or into bankruptcy. Indeed, the detailed record before the Court on this application indicates that without the ability to utilize the funds as requested, the hospital's continued existence would be in jeopardy, that is, if the use of the funds was limited solely to ophthalmology purposes, the consequence could be a failure of the hospital itself and the loss to the community of a valued medical facility. Such a result would obviously frustrate the charitable intent of the testator (see Matter of Othmer, 185 Misc 2d 122).
Accordingly, in exercise of its discretionary powers, the Court grants the relief requested [*3]by petitioner.
Order signed.
JOHN M. CZYGIER, JR., Surrogate
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